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<SEC-DOCUMENT>0000898432-97-000251.txt : 19970429
<SEC-HEADER>0000898432-97-000251.hdr.sgml : 19970429
ACCESSION NUMBER: 0000898432-97-000251
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19970228
FILED AS OF DATE: 19970428
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NEUBERGER & BERMAN EQUITY TRUST
CENTRAL INDEX KEY: 0000906926
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0831
FILING VALUES:
FORM TYPE: N-30D
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-07784
FILM NUMBER: 97588325
BUSINESS ADDRESS:
STREET 1: 605 THIRD AVE
STREET 2: 2ND FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10158-0006
BUSINESS PHONE: 2124768800
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<TEXT>
<PAGE>
SEMI-ANNUAL REPORT
------------------------
February 28, 1997
NEUBERGER&BERMAN
EQUITY TRUST-Registered Trademark-
Neuberger&Berman
FOCUS TRUST
Neuberger&Berman
GENESIS TRUST
Neuberger&Berman
GUARDIAN TRUST
Neuberger&Berman
MANHATTAN TRUST
Neuberger&Berman
PARTNERS TRUST
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
THE FUNDS
<S> <C>
CHAIRMAN'S LETTER 4
PERFORMANCE
HIGHLIGHTS 5
PORTFOLIO COMMENTARY
Focus Trust 6
Genesis Trust 8
Guardian Trust 11
Manhattan Trust 14
Partners Trust 17
FINANCIAL STATEMENTS 20
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Focus Trust 30
Genesis Trust 31
Guardian Trust 32
Manhattan Trust 33
Partners Trust 34
THE PORTFOLIOS
SCHEDULE OF
INVESTMENTS
TOP TEN EQUITY
HOLDINGS
Focus Portfolio 37
Genesis Portfolio 39
Guardian Portfolio 42
Manhattan Portfolio 46
Partners Portfolio 48
FINANCIAL STATEMENTS 52
FINANCIAL HIGHLIGHTS 63
DIRECTORY 66
OFFICERS AND
TRUSTEES 67
</TABLE>
3
<PAGE>
CHAIRMAN'S LETTER April 11, 1997
Dear Fellow Shareholder:
During the six months ended February 28, 1997, we witnessed one of the most
explosive rallies in stock market history with the Dow Jones Industrial Average
and Standard & Poor's 500 Index gaining 23.82% and 22.60%, respectively. High
multiple blue chip stocks (particularly branded consumer goods companies),
continued to lead the market parade. Not left out of the rally were technology,
financial services, and health care stocks, which rebounded as well, helping our
funds achieve solid gains.
With the Dow and S&P "500" near record levels and equities valuations well
above historic norms, we are comforted by our conviction that our portfolios are
comprised of high quality companies trading at reasonable fundamental valuations
relative to the market and their long term growth prospects. We have a talented
and experienced group of analysts and portfolio managers who, in keeping with
our firm's heritage, focus primarily on value.
If the economy continues to provide low inflation, relatively low interest
rates and reasonable corporate earnings, stocks can continue to progress. We
believe well managed, financially sound companies in out-of-favor industries
will participate more fully in a market advance. We have faith investors will
ultimately see the folly in chasing a relative handful of blue-chip growth
stocks simply because they are going up in price. Sooner or later, money will
gravitate to equally high-quality companies selling at much more reasonable
fundamental valuations.
Whatever the market holds in store for us over the next six months and beyond,
we will continue to do what we have always done -- focus on quality and
value -- the two most important ingredients in the recipe for long term
investment success.
Sincerely,
/s/ Stanley Egener
Stanley Egener
Chairman of the Board
Neuberger&Berman Equity Trusts
4
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
FOR PERIODS
ENDED 3/31/97
SIX MONTH --------------------------------
PERIOD AVERAGE ANNUAL TOTAL
NEUBERGER&BERMAN ENDED RETURNS(1)
EQUITY TRUST 2/28/97(1) 1 YR 5 YR 10 YR
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS TRUST(2) +22.01% +13.22% +17.82% +13.34%
GUARDIAN TRUST +20.21% +14.20% +15.85% +13.29%
MANHATTAN TRUST +20.61% +6.82% +13.74% +10.86%
PARTNERS TRUST +23.55% +18.88% +17.51% +13.21%
S&P "500"(3) +22.60% +19.79% +16.39% +13.33%
GENESIS TRUST +11.88% +18.42% +13.98% +13.93%(4)
RUSSELL 2000(3) +8.79% +5.08% +12.78% N/A
</TABLE>
Each Fund commenced operations in August 1993.
The Funds have identical investment objectives and policies, and invest in
the same Portfolio as other funds ("Sister Funds") of similar names, which are
also administered by Neuberger&Berman Management Inc.-Registered Trademark- The
performance information for the Funds prior to their commencement of operations
are for the Sister Funds. Neuberger&Berman Management Inc. voluntarily bears
certain operating expenses of each Fund so that its expense ratio per annum will
not exceed the expense ratio of its Sister Fund by more than 0.10% of the Fund's
average daily net assets. These arrangements can be terminated upon 60 days'
notice. Neuberger&Berman Management Inc. has voluntarily agreed to waive a
portion of the management fee borne directly by Neuberger&Berman Genesis
Portfolio and indirectly by Neuberger& Berman Genesis Trust to reduce that fee
by 0.10% of the Portfolio's average daily net assets per annum. Absent such
arrangements, the average annual total returns would have been less. The total
returns for periods prior to the Funds' commencement of operations would have
been lower had they reflected the higher expense ratios of the Funds as compared
to those of the Sister Funds.
1) Includes reinvestment of all dividends and capital gain distributions.
Results represent past performance and do not guarantee future results.
Investment returns and principal may fluctuate and shares when redeemed may
be worth more or less than original cost.
2) Prior to November 1, 1991, the investment policies of its Sister Fund
required that it invest a substantial portion of its assets in the energy
field.
3) The S&P "500" Index is an unmanaged index generally considered to be
representative of stock market activity. The Russell 2000 Index is an
unmanaged index consisting of the securities of the 2,000 issuers having the
smallest capitalization in the Russell 3000 Index, representing approximately
11% of the Russell 3000 total market capitalization. The smallest company's
market capitalization is roughly $13 million. The risks involved in seeking
capital appreciation from investments primarily in companies with small
market capitalization are set forth in the prospectus. Please note that
indices do not take into account any fees and expenses of investing in the
individual securities that they track, and that individuals cannot invest
directly in any index. Data about the performance of these indices are
prepared or obtained by Neuberger&Berman Management Inc. and include
reinvestment of all dividends and capital gain distributions. The Portfolios
invest in many securities not included in either of the above-described
indices.
4) From inception of Sister Fund (9/27/88).
5
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Focus Trust
PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN EMPLOY A SECTOR-SPECIFIC
APPROACH TO MANAGING THE PORTFOLIO. FIRST, THEY IDENTIFY SIX ECONOMIC
SECTORS (OUT OF A POSSIBLE 13) THEY BELIEVE TO BE MOST UNDERVALUED. THEY
THEN FOCUS ON WELL MANAGED, FINANCIALLY SOUND INDUSTRY LEADERS IN EACH
CHOSEN ECONOMIC SECTOR. THE PORTFOLIO MANAGEMENT TEAM FAVORS COMPANIES
WITH ABOVE MARKET AVERAGE EARNINGS GROWTH POTENTIAL TRADING AT BELOW
MARKET AVERAGE PRICE/ EARNINGS MULTIPLES.
For the six months ended February 28, 1997, the fund returned 22.01%, in line
with the Standard & Poor's 500 Index's 22.60% gain (see page 5 for the average
annual total returns, as of March 31, 1997).
Over the last six months, our substantial commitment to financial stocks
(37.6% of the portfolio at the close of the first half of fiscal 1997) was
particularly productive, with bank, insurance, credit and finance company
holdings returning 39% on average. Technology investments, subdivided into
electronics companies and computer and office equipment companies (13.8% of the
portfolio at the close of the first half of fiscal 1997) gained 28% and 37%,
respectively. Media and entertainment were among our worst performing groups,
with our holdings down 6.2% over the period.
Despite the group's stellar performance, we believe selected financial stocks
remain fundamentally undervalued. Travelers Group and Capital One Financial
still trade at well below market average price/earnings multiples. Why are these
stocks still cheap? Conventional wisdom seems to be that rising interest rates
will hurt earnings. We believe that concern has been overblown and that top
quality financial companies can continue to increase earnings even if interest
rates trend modestly higher. The managements of many financial companies seem to
agree that their stocks are still under-valued, as is evidenced by ongoing share
repurchase activity.
We continue to favor selected technology companies like Compaq Computer and
Seagate Technology. Compaq's product line is selling
6
<PAGE>
- ----------------------------------------------------------------------
Focus Trust (Cont'd)
well, manufacturing costs are lower, and its product mix is more profitable. In
our view, Seagate is well positioned in the highest growth segment of the
computer disk drive market. Prices have firmed, costs have been reduced and
sales volume has risen. Disciplined value investors like ourselves periodically
get the opportunity to buy high-quality technology companies at below market
average multiples. When we do, we add these securities to our portfolio.
Value investing demands patience. For example, take Exide Corp., the world's
largest manufacturer of automotive, marine and specialty batteries. Exide is
focused on improving profitability in Europe where it is one of the market
leaders. Weather patterns can cause sharp swings in the demand for batteries.
Severely cold weather provokes high levels of battery failures, while unusually
mild winters or cool summers depress demand.
Exide's sales and earnings have been weak in recent periods, due to mild
weather conditions in Europe and restructuring charges. However, we are
encouraged by the improved gross margins seen in the first nine months of fiscal
year 1997 (started March 1996), and we will carefully monitor whether this trend
continues in the future.
In the first half of fiscal 1997, our value discipline once again rewarded
shareholders. We remain committed to the investment strategy -- buying great
companies when they are opportunistically priced -- that has been responsible
for the fund's superior long-term performance record.
The composition, industries and holdings of the portfolio are subject to change.
Focus Trust's portfolio is invested in a wide array of stocks, and no single
holding makes up more than a small fraction of the portfolio's total assets.
While the value-oriented approach is intended to limit risks, the
portfolio -- with its concentration in sectors -- may be more greatly affected
by any single economic, political or regulatory development than a more
diversified mutual fund.
Please remember that past performance is not indicative of future results.
7
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Genesis Trust
PORTFOLIO MANAGER JUDITH VALE FOCUSES ON "EASY-TO-UNDERSTAND" COMPANIES IN
THE LESS GLAMOROUS SECTORS OF THE SMALL-CAPITALIZATION STOCK UNIVERSE. BY
AVOIDING THE CUTTING EDGE TECHNOLOGY COMPANIES THAT ATTRACT SO MUCH
SPECULATIVE ATTENTION IN THE SMALL-CAP MARKET, SHE IS BETTER ABLE TO
IDENTIFY FUNDAMENTALLY UNDERVALUED STOCKS WITH PROMISING GROWTH POTENTIAL.
WE HAVE FOUND THAT THIS VALUE-ORIENTED APPROACH TO SMALL-CAP INVESTING CAN
TRANSLATE INTO A PORTFOLIO WITH FAVORABLE RISK/REWARD CHARACTERISTICS.
For the six months ended February 28, 1997, the fund returned 11.88% versus
the Russell 2000 Index's 8.79% advance (see page 5 for the average annual total
returns, as of March 31, 1997).
A big part of our strategy over the last six months has been to limit the
portfolio's exposure to cyclical companies, which generally depend on a rapidly
expanding economy to grow sales and earnings. Although the cyclicals are
fundamentally attractive, they can perform poorly during periods of economic
uncertainty. Instead, we focused on contra-cyclical industries (industries that
have their own cycles largely independent of the main business cycle); "Steady
Eddie" companies that do not depend on broad-based economic momentum to grow
earnings; and special situations we believe can buck economic and industry
trends.
Our best performing contra-cyclical investments were aerospace component
manufacturers and oil and gas exploration and service companies. Both industries
are recovering from deep and lengthy down-cycles, which eliminated competition
and reduced capacity. Demand is now strong, and there is tremendous pricing
flexibility, which has the potential to expand margins and accelerate earnings.
After a lengthy recession in the aerospace industry, some signs indicate that
we are currently in the relatively early stages of what, in our view, could be
an enormous commercial aerospace boom fueled by the rapid expansion of airline
fleets here and abroad. As small-cap investors, we can't own Boeing, but we can
buy small component manufacturers that supply parts to this giant and its
arch-rival Airbus. One of our
8
<PAGE>
- ----------------------------------------------------------------------
Genesis Trust (Cont'd)
current favorites is Thiokol, which is best known for supplying rocket boosters
for the space shuttle, but, through its Huck fasteners business and 49%
ownership of Howmet Casting, is also a major supplier to commercial aerospace
companies. In our opinion, Thiokol's market position is not adequately reflected
in its stock price.
Due to higher energy prices (as we write, West Texas Crude Oil was priced at
around $20.50 per barrel, up from $17.50 from the summer of 1995 and well above
the $13.00 per barrel low reached in the 1980's) and new technology that reduces
costs, the economics of drilling for oil and natural gas have improved
dramatically in the last eighteen months. We expect the economics to remain
favorable even if energy prices decline modestly over the next several years.
This could result in rising earnings for exploration companies and drilling
equipment and service suppliers. We hit a few gushers over the last six months,
with Offshore Logistics, Dreco Energy, and Pride Petroleum all making our top
performing stock list.
We hit some dry holes as well. For example, DH Technology, a specialty printer
company, ran into inventory problems at the customer level that hurt earnings.
AptarGroup, a company that makes specialty packaging for the food and
pharmaceutical industries, is a good example of our "Steady Eddie" investment
strategy. Aptar has had an above market average earnings growth rate. More
importantly, because it serves the food and drug industries, earnings have not
been dependent on broad-based economic momentum. The market is rewarding
large-cap brand-name consumer goods and drug companies with price/earnings
multiples well above annual earnings growth rates. We believe little AptarGroup
is much more reasonably priced.
We are proud to have delivered good absolute and relative returns in what has
been a challenging small-cap stock market. By avoiding the
9
<PAGE>
- ----------------------------------------------------------------------
Genesis Trust (Cont'd)
high priced glamour stocks and focusing on real fundamental values in the
small-cap stock universe, we are confident that we have served our shareholders
well.
The risks involved in seeking capital appreciation from investments principally
in companies with small market capitalization are set forth in the prospectus.
The composition, industries and holdings of the portfolio are subject to change.
Genesis Trust's portfolio is invested in a wide array of stocks, and no single
holding makes up more than a small fraction of the portfolio's total assets.
Please remember that past performance is not indicative of future results.
10
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Guardian Trust
PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN FOCUS ON "FIRST RATE"
COMPANIES IN INDUSTRIES THAT ARE CURRENTLY OUT-OF-FAVOR. RECOGNIZING THAT
"CHEAP" STOCKS ARE NOT NECESSARILY UNDERVALUED, THEY SEEK WELL MANAGED,
FINANCIALLY SOUND COMPANIES TRADING AT FUNDAMENTALLY ATTRACTIVE
PRICE/EARNINGS MULTIPLES RELATIVE TO THE MARKET AND THEIR LONG-TERM
EARNINGS GROWTH POTENTIAL. BY CONCENTRATING THE PORTFOLIO IN WHAT THEY
BELIEVE ARE HIGH-QUALITY WALL STREET "ORPHANS," THE PORTFOLIO MANAGEMENT
TEAM ATTEMPTS TO TAKE CONSISTENT ADVANTAGE OF OPPORTUNITIES CREATED BY
INVESTORS' OVERREACTION TO REAL OR PERCEIVED PROBLEMS.
For the six months ended February 28, 1997, the fund advanced 20.21%; versus
the Standard & Poor's 500 Index's 22.60% return (see page 5 for the average
annual total returns, as of March 31, 1997).
Over this six-month period, the portfolio's concentration in banking,
insurance, credit and finance stocks, including real estate investment trusts,
(collectively, 31.5% at the close of the first half of fiscal 1997) generated
average returns of approximately 37.0%. Technology investments (our second
largest group weighting at 16.8%) also contributed to performance with
electronics company holdings gaining 48.9% and computer and office equipment
stocks returning 31.6%. Our automotive and auto parts holdings modestly
under-performed the market. Returns from our health care investments were mixed.
As is evidenced by their heavy weighting in the portfolio, we continue to like
selected financial stocks. Wall Street seems to believe rising interest rates
will disrupt financial companies' earnings progress. That may not be the case.
We think financial stocks like CITICORP, Travelers Group, Fannie Mae, and
Merrill Lynch, to name just a few of our holdings, have the capacity to grow
earnings at an above market average pace, even if interest rates move modestly
higher. The stocks still trade at well below market average multiples. That is
our definition of value.
One doesn't generally associate technology stocks with value investing.
However, the technology group's volatility actually lends itself to our
discipline of buying first rate companies at discounted multiples. In
11
<PAGE>
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Guardian Trust (Cont'd)
mid-summer 1996, tech stocks got hit hard. The market's overreaction to some
modest earnings disappointments gave us the opportunity to buy some seemingly
great companies quite cheaply. Seagate Technology, an example of this, was one
of our best performing stocks over the past six months. In our view, Seagate is
well positioned in the highest growth segment of the computer disk drive market.
Prices have firmed, costs have been reduced and sales volume has risen. We had
the opportunity to purchase shares at what we viewed as bargain prices. We
continually monitor the valuations of all the industry groups and individual
stocks in our research universe. When technology stocks are out-of-favor, we
consider adding them to the portfolio.
The media and entertainment and energy groups (collectively, about 8.6% of our
portfolio) under-performed over the reporting period. Most of our media and
entertainment holdings reported relatively good free cash flow growth -- the
best barometer of progress in these businesses -- but it was largely overlooked
by investors fixated on net earnings growth. In addition, we think investors
have overreacted to energy prices retreating from their 1996 highs. Going
forward, we believe energy prices will stabilize around current levels, and
energy company earnings could then trend higher.
Fertilizer company IMC Global and specialty chemical producer Cabot Corp. were
among our poorer performing stocks over the last six months as both recorded
major earnings disappointments. A weather-induced late start to the planting
season hurt IMC's sales and earnings. However, in our judgment, low worldwide
grain inventories may indicate better times ahead for the fertilizer industry.
Cabot was burdened by weak demand for its core carbon black product and high
expenses associated with new specialty chemical product development. Short-term
earnings may continue to disappoint. In the long term, however, the company's
recently expanded share repurchase program will leverage returns.
With the sale of its property-casualty unit and its acquisition of U.S.
Healthcare, we believe Aetna (currently our fourth largest holding) has
12
<PAGE>
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Guardian Trust (Cont'd)
transformed itself from a relatively slow-growth insurance company to a dominant
player in the faster-growing managed health care business. Aetna's goal is now
to extend U.S. Healthcare's base from small companies to large corporate
customers. The stock has done well, but still trades at a multiple discount to
the market.
In the first half of fiscal 1997, value stocks performed much better than a
year ago. However, the market is still favoring high multiple blue-chip growth
companies. We don't know how long this will last or when the speculative
excesses will be wrung out of the market. We are confident that our portfolio is
comprised of quality companies trading at very reasonable fundamental
valuations.
The composition, industries and holdings of the portfolio are subject to change.
Guardian Trust's portfolio is invested in a wide array of stocks, and no single
holding makes up more than a small fraction of the portfolio's total assets.
Please remember that past performance is not indicative of future results.
13
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Manhattan Trust
PORTFOLIO MANAGER MARK GOLDSTEIN EMPLOYS A "GROWTH AT A REASONABLE PRICE"
(GARP) APPROACH TO THE EQUITIES MARKET. HE SEEKS WELL MANAGED-COMPANIES
WITH STRONG BALANCE SHEETS, CONSISTENT EARNINGS GROWTH RECORDS,
ABOVE-AVERAGE RETURNS ON EQUITY, HIGH FREE CASH FLOW, AND MOST
IMPORTANTLY, REASONABLE FUNDAMENTAL VALUATIONS. BY SHUNNING "HIGH FLYING"
WALL STREET FAVORITES, HE ATTEMPTS TO AVOID ONE OF THE MOST COMMON AND
COSTLY INVESTMENT ERRORS -- PAYING TOO MUCH FOR GOOD COMPANIES.
For the six months ended February 28, 1997, the fund returned 20.61%; compared
to the Standard & Poor's 500 Index's 22.60% gain (see page 5 for the average
annual total returns, as of March 31, 1997).
During the first half of fiscal 1997, value re-asserted itself. Our
portfolio's over-weighting in the financial services and technology industries
paid off handsomely. Returns from our investments in retailers and
communications companies were less productive.
Our positions in bank stocks like CITICORP and Wells Fargo had a very positive
impact on performance, but the real stars of our show were credit card companies
like MBNA and Capital One Financial. We took the opportunity to sell some shares
of these stocks to take advantage of their price appreciation. We still believe,
however, some of these stocks offer a good value. Why are credit card companies
so under-loved? Rising consumer debt and credit card delinquency rates have
spooked investors. This is a problem, but, in our opinion, not nearly as big a
one as most investors perceive. Revenues have been growing rapidly. Despite
heated competition, there has been enough pricing flexibility in the industry to
maintain attractive profit margins. Capital One Financial and MBNA are still
trading at below market average price/earnings multiples. Ironically, even
though most credit card companies were originally sold by or spun-off from bank
holding companies, strong free cash flows could make some of them attractive
acquisition candidates for banks looking to add cash-generating subsidiaries, as
is apparently the case in Banc One's pending acquisition of First USA at 20
times earnings.
14
<PAGE>
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Manhattan Trust (Cont'd)
We have had some disappointments. Poor performance from stocks like Nu-Kote
Holding, Coventry, and a handful of others was a direct result of unanticipated
earnings shortfalls. Other underperformers like cellular telephone giant
Airtouch Communications actually posted relatively good results, but sold off
due to concern over prospects for future competition from Personal
Communications Services (PCS) operators. We think the market is vastly
underestimating the value of Airtouch's extensive foreign operations via
partnerships with cellular operators in Germany, Italy, Spain and elsewhere. We
believe Airtouch's international operations alone are worth two-thirds of its
current stock price and the whole company is trading at about half its true
value.
Recently, we've taken a bite of Lone Star Steakhouse & Saloon, a restaurant
chain that has been growing rapidly. We like what's been on the menu, notably
25% profit margins, among the highest in the industry, and about a 40% cash
return on investment. Lone Star currently has 205 outlets and plans to expand
this number by 20% annually over the next few years. The stock is trading at a
price/earnings multiple well below its annual earnings growth rate.
We have also bought Merrill Lynch, one of the great names in the financial
services industry. In our view, Merrill already has what the Morgan Stanley/Dean
Witter combination is hoping to create -- a dominant global franchise in the
brokerage and asset management businesses. The demographics are in Merrill's
favor with the baby boomers in the early stages of their prime
earnings/savings/investment years. Over 50% of Merrill's compensation expense,
always the largest cost component in this business, is incentive oriented. We
believe this is simply a terrific organization in a historically good long-term
growth industry, yet it trades at a significant multiple discount to the market.
15
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Manhattan Trust (Cont'd)
We are pleased with the fund's performance over the last six months,
particularly in view of the fact that it was achieved without stretching our
guiding philosophy of growth at a reasonable price. We believe by sticking to
our fundamental discipline, we can continue to deliver favorable risk adjusted
returns.
The composition, industries and holdings of the portfolio are subject to change.
Manhattan Trust's portfolio is invested in a wide array of stocks, and no single
holding makes up more than a small fraction of the portfolio's total assets.
Please remember that past performance is not indicative of future results.
16
<PAGE>
PORTFOLIO COMMENTARY
Neuberger&Berman
- ----------------------------------------------------------------------
Partners Trust
PORTFOLIO CO-MANAGERS MICHAEL KASSEN AND ROBERT GENDELMAN FOCUS ON
OUT-OF-FAVOR LARGE-CAP STOCKS AND MID-SIZED COMPANIES LESS WIDELY FOLLOWED
BY WALL STREET ANALYSTS. THEY ARE PARTICULARLY PARTIAL TO "FALLEN
ANGELS" -- STOCKS OF GROWING COMPANIES THAT HAVE EXPERIENCED TEMPORARY
SETBACKS, BUT WHOSE LONGER-TERM FUNDAMENTAL OUTLOOK REMAINS STRONG. THE
PORTFOLIO MANAGEMENT TEAM VIEWS STOCKS AS PIECES OF BUSINESSES THEY WOULD
LIKE TO OWN, RATHER THAN PIECES OF PAPER TO TRADE BASED ON SHORT-TERM
PRICE FLUCTUATIONS. THEIR GOAL IS TO FIND QUALITY COMPANIES TRADING AT A
DISCOUNT TO THEIR INTRINSIC ECONOMIC VALUE.
For the six months ended February 28, 1997, the fund returned 23.55% compared
to the Standard & Poor's 500 Index's 22.60% gain (see page 5 for the average
annual total returns, as of March 31, 1997).
We build the portfolio from the ground up, stock by stock, but generally end
up over-weighting several industry groups that we believe offer attractive
fundamental values. Over the last six months, our focus on the banking,
insurance, and technology industries has helped us achieve strong absolute and
relative returns. We have been penalized by our limited exposure to drug stocks,
a group we like, but one in which we couldn't find many true fundamental
bargains.
Going forward, we continue to favor selected bank stocks. Wells Fargo is a
good example. Management has extended the franchise through what, in our
opinion, are economically sensible strategic acquisitions. They have found
creative low cost methods, including the Internet, to attract new customers. The
company has moved to penetrate the small business market in a very targeted
fashion. Free cash flow has grown, and management has been using this cash to
buy back stock. Despite the stock's excellent performance, Wells Fargo still
trades at a significant discount to our appraisal of its economic value.
We also would like to highlight Capital One Financial. Capital One is one of
the largest issuers of Visa and Mastercard credit cards. Despite its solid
earnings performance and a history of consistently high return on equity, we
believe Capital One still trades below the market average
17
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Partners Trust (Cont'd)
price/earnings multiple. Credit cards have continued to gain share as a
percentage of personal consumption expenditures, leading to what we perceive as
favorable industry growth trends. Furthermore, the company's conservative credit
line policy, which includes low average credit lines and balances, should keep
charge-offs below industry averages.
On the other side of the ledger, our investments in deep cyclical industries,
such as steel and non-ferrous metals underperfomed the rest of the portfolio.
The industries were hurt as investors had anticipated a slowing economy.
In order to buy quality companies at bargain prices, value managers like
ourselves often have to buy during periods of real or perceived crisis. Our goal
is to analyze a company's problems to see if there is light at the end of the
tunnel. For instance, we recently bought McDonald's. McDonald's stock has been
under a lot of pressure due to slower growth in its domestic restaurant
business. However, internationally McDonald's has boomed. It is one of the most
recognized brand names in the world and international expansion has been the
real growth engine for the company -- a factor overlooked by the market.
The fund's strong performance in the first half of fiscal 1997 reaffirms our
faith in the value discipline. We are confident that buying great companies when
they are cheap will continue to reward our shareholders.
The composition, industries and holdings of the portfolio are subject to change.
Partners Trust's portfolio is invested in a wide array of stocks, and no single
holding makes up more than a small fraction of the portfolio's total assets.
Please remember that past performance is not indicative of future results.
18
<PAGE>
(This page has been left blank intentionally.)
19
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) TRUST TRUST
-------------------------------
<S> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 107,555 $ 135,866
Deferred organization costs (Note A) 15 15
Receivable for Trust shares sold 243 506
-------------------------------
107,813 136,387
-------------------------------
LIABILITIES
Payable for Trust shares redeemed 342 209
Payable to administrator -- net (Note B) 24 48
Accrued expenses 35 28
-------------------------------
401 285
-------------------------------
NET ASSETS at value $ 107,412 $ 136,102
-------------------------------
NET ASSETS consist of:
Par value $ 6 $ 8
Paid-in capital in excess of par value 89,813 115,669
Accumulated undistributed net investment
income (loss) (21) (117)
Accumulated net realized gains on investment 938 295
Net unrealized appreciation in value of
investment 16,676 20,247
-------------------------------
NET ASSETS at value $ 107,412 $ 136,102
-------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 5,956 8,182
-------------------------------
NET ASSET VALUE, offering and redemption price per
share $18.03 $16.63
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
TRUST TRUST TRUST
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in corresponding Portfolio, at
value (Note A) $ 1,767,445 $ 42,550 $ 267,185
Deferred organization costs (Note A) 14 15 15
Receivable for Trust shares sold 2,195 73 1,268
------------------------------------------------
1,769,654 42,638 268,468
------------------------------------------------
LIABILITIES
Payable for Trust shares redeemed 2,545 132 152
Payable to administrator -- net (Note B) 557 5 70
Accrued expenses 125 34 34
------------------------------------------------
3,227 171 256
------------------------------------------------
NET ASSETS at value $ 1,766,427 $ 42,467 $ 268,212
------------------------------------------------
NET ASSETS consist of:
Par value $ 105 $ 3 $ 17
Paid-in capital in excess of par value 1,393,139 32,905 227,285
Accumulated undistributed net investment
income (loss) (163) (107) 148
Accumulated net realized gains on investment 24,677 2,173 7,182
Net unrealized appreciation in value of
investment 348,669 7,493 33,580
------------------------------------------------
NET ASSETS at value $ 1,766,427 $ 42,467 $ 268,212
------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares
authorized) 105,192 3,099 16,991
------------------------------------------------
NET ASSET VALUE, offering and redemption price per
share $16.79 $13.70 $15.79
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) TRUST TRUST
---------------------------
<S> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 464 $ 513
---------------------------
Expenses:
Administration fee (Note B) 165 193
Amortization of deferred organization and
initial offering expenses (Note A) 4 4
Auditing fees 3 3
Custodian fees 5 5
Legal fees 11 11
Registration and filing fees 21 18
Shareholder reports 22 17
Shareholder servicing agent fees 12 9
Trustees' fees and expenses -- 1
Miscellaneous 1 1
Expenses from corresponding Portfolio (Notes
A & B) 222 384
---------------------------
Total expenses 466 646
Deduct -- expenses reimbursed by
administrator (Note B) (67) (16)
---------------------------
Total net expenses 399 630
---------------------------
Net investment income (loss) 65 (117)
---------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 1,187 377
Net realized loss on option contracts written (36) --
Change in net unrealized appreciation of
investment securities and option contracts
written 14,575 8,701
---------------------------
Net gain on investments from corresponding
Portfolio (Note A) 15,726 9,078
---------------------------
Net increase in net assets resulting from
operations $ 15,791 $ 8,961
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
For the Six Months Ended February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
TRUST TRUST TRUST
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 10,599 $ 130 $ 1,329
------------------------------------------------
Expenses:
Administration fee (Note B) 3,098 86 359
Amortization of deferred organization and
initial offering expenses (Note A) 5 4 4
Auditing fees 2 4 2
Custodian fees 5 5 5
Legal fees 14 11 11
Registration and filing fees 109 13 33
Shareholder reports 125 19 26
Shareholder servicing agent fees 13 10 9
Trustees' fees and expenses 9 1 1
Miscellaneous 7 -- 1
Expenses from corresponding Portfolio (Notes
A & B) 3,555 128 443
------------------------------------------------
Total expenses 6,942 281 894
Deduct -- expenses reimbursed by
administrator (Note B) -- (44) (72)
------------------------------------------------
Total net expenses 6,942 237 822
------------------------------------------------
Net investment income (loss) 3,657 (107) 507
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain on investment securities 26,193 3,412 8,593
Net realized loss on option contracts written (662) -- --
Change in net unrealized appreciation of
investment securities and option contracts
written 250,381 4,943 25,854
------------------------------------------------
Net gain on investments from corresponding
Portfolio (Note A) 275,912 8,355 34,447
------------------------------------------------
Net increase in net assets resulting from
operations $ 279,569 $ 8,248 $ 34,954
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger&Berman
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
FOCUS TRUST GENESIS TRUST
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1997 August 31, 1997 August 31,
(000'S OMITTED) (UNAUDITED) 1996 (UNAUDITED) 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 65 $ 230 $ (117) $ (104)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 1,151 (313) 377 1,183
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 14,575 488 8,701 6,518
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 15,791 405 8,961 7,597
-------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (289) (33) -- --
Net realized gain on investments -- (133) (846) (822)
-------------------------------------------------------------
Total distributions to shareholders (289) (166) (846) (822)
-------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 58,758 59,911 75,527 30,213
Proceeds from reinvestment of
dividends and distributions 289 161 846 822
Payments for shares redeemed (22,750) (19,169) (13,622) (3,211)
-------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 36,297 40,903 62,751 27,824
-------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 51,799 41,142 70,866 34,599
NET ASSETS:
Beginning of period 55,613 14,471 65,236 30,637
-------------------------------------------------------------
End of period $ 107,412 $ 55,613 $ 136,102 $ 65,236
-------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ (21) $ 203 $ (117) $ --
-------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 3,521 4,038 4,597 2,095
Issued on reinvestment of dividends
and distributions 17 11 51 64
Redeemed (1,332) (1,303) (819) (227)
-------------------------------------------------------------
Net increase (decrease) in shares
outstanding 2,206 2,746 3,829 1,932
-------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
- ----------------------------------------------------------------------
Equity Trust
<TABLE>
<CAPTION>
PARTNERS
GUARDIAN TRUST MANHATTAN TRUST TRUST
Six Months Six Months Six Months
Ended Year Ended Year Ended
February 28, Ended February 28, Ended February 28,
1997 August 31, 1997 August 31, 1997
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 3,657 $ 13,233 $ (107) $ (172) $ 507
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 25,531 24,032 3,412 1,705 8,593
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 250,381 8,398 4,943 (3,356) 25,854
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 279,569 45,663 8,248 (1,823) 34,954
-----------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (7,800) (9,999) -- -- (962)
Net realized gain on investments (22,820) (10,557) (2,874) (1,370) (7,693)
-----------------------------------------------------------------------------
Total distributions to shareholders (30,620) (20,556) (2,874) (1,370) (8,655)
-----------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 321,151 854,807 7,284 24,466 123,321
Proceeds from reinvestment of
dividends and distributions 30,615 20,520 2,874 1,370 8,113
Payments for shares redeemed (174,376) (243,412) (21,263) (10,026) (17,972)
-----------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions 177,390 631,915 (11,105) 15,810 113,462
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 426,339 657,022 (5,731) 12,617 139,761
NET ASSETS:
Beginning of period 1,340,088 683,066 48,198 35,581 128,451
-----------------------------------------------------------------------------
End of period $ 1,766,427 $ 1,340,088 $ 42,467 $ 48,198 $ 268,212
-----------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ (163) $ 3,980 $ (107) $ -- $ 148
-----------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 20,162 60,492 544 1,900 8,048
Issued on reinvestment of dividends
and distributions 1,928 1,469 226 110 538
Redeemed (11,028) (17,232) (1,627) (792) (1,187)
-----------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding 11,062 44,729 (857) 1,218 7,399
-----------------------------------------------------------------------------
<CAPTION>
Year
Ended
August 31,
1996
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 726
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 7,827
Change in net unrealized
appreciation of investments from
corresponding Portfolio (Note A) 212
Net increase (decrease) in net
assets resulting from operations 8,765
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (364)
Net realized gain on investments (4,629)
Total distributions to shareholders (4,993)
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 75,478
Proceeds from reinvestment of
dividends and distributions 4,893
Payments for shares redeemed (17,026)
Net increase (decrease) from Trust
share transactions 63,345
NET INCREASE (DECREASE) IN NET ASSETS 67,117
NET ASSETS:
Beginning of period 61,334
End of period $ 128,451
Accumulated undistributed net
investment income (loss) at end of
period $ 603
NUMBER OF TRUST SHARES:
Sold 5,647
Issued on reinvestment of dividends
and distributions 394
Redeemed (1,287)
Net increase (decrease) in shares
outstanding 4,754
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Trust ("Focus"), Neuberger&Berman Genesis
Trust ("Genesis"), Neuberger&Berman Guardian Trust ("Guardian"),
Neuberger&Berman Manhattan Trust ("Manhattan"), and Neuberger&Berman Partners
Trust ("Partners") (collectively, the "Funds") are separate operating series
of Neuberger&Berman Equity Trust (the "Trust"), a Delaware business trust
organized pursuant to a Trust Instrument dated May 6, 1993. The Trust is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940, as amended, and its shares are registered
under the Securities Act of 1933, as amended. The trustees of the Trust may
establish additional series or classes of shares without the approval of
shareholders.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
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 (8.03%, 26.59%, 23.42%, 7.32%, and 9.97%, for Focus, Genesis,
Guardian, Manhattan, and Partners, respectively, at February 28, 1997). The
performance of each Fund is directly affected by the performance of its
corresponding Portfolio. The financial statements of each Portfolio,
including the Schedule of Investments, are included elsewhere in this report
and should be read in conjunction with the corresponding Fund's financial
statements.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
by Equity Managers Trust as indicated in the notes following the Portfolios'
Schedule of Investments.
3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate
entity for Federal income tax purposes. It is the policy of each Fund to
continue to qualify as a regulated investment company by complying with the
provisions available to certain investment companies, as defined in
applicable sections of the Internal Revenue Code, and to make distributions
of investment company taxable income and net capital gains (after reduction
for any amounts available for Federal income
26
<PAGE>
tax purposes as capital loss carryforwards) sufficient to relieve it from
all, or substantially all, Federal income taxes. Accordingly, each Fund paid
no Federal income taxes and no provision for Federal income taxes was
required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
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 ($169,636 expiring in 2004, for Focus, determined as of August
31, 1996), it is the policy of each Fund not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) ORGANIZATION EXPENSES: Expenses incurred by each Fund in connection with its
organization are being amortized by that Fund on a straight-line basis over a
five-year period. At February 28, 1997, the unamortized balance of such
expenses amounted to $14,625, $14,517, $13,879, $14,624, and $14,626, 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.
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 Neuberger&Berman Management Incorporated ("Management") as
its administrator under an Administration Agreement ("Agreement") dated as of
August 3, 1993. Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of .40% of that Fund's average daily net
assets. Each Fund indirectly pays for investment management services through its
investment in its corresponding Portfolio (see Note B of Notes to Financial
Statements of the Portfolios). The Agreement provides that, if with respect to
any fiscal year of each
27
<PAGE>
Fund, its total operating expenses plus its pro rata portion of its
corresponding Portfolio's operating expenses (including the fees payable to
Management but excluding interest, taxes, brokerage commissions, and
extraordinary expenses) ("Operating Expenses") exceed the most restrictive of
the expense limitations imposed by securities laws of the states in which such
Fund's shares are qualified for sale, the administration fees for that fiscal
year will be reduced by the amount of such excess, provided that Management has
no obligation to reimburse the Fund for any such expenses that exceed the
administration fee. The most restrictive expense limitation applicable during
the six months ended February 28, 1997, to which each Fund was subject, was
2 1/2% of the first $30 million of average daily net assets, 2% of the next $70
million of average daily net assets, and 1 1/2% of any additional average daily
net assets. No reduction in the administration fee as a result of any state
expense limitation was required for the six months ended February 28, 1997.
Currently, there are no state expense limitations applicable to any Fund.
Management has voluntarily undertaken (subject to termination upon 60 days'
prior written notice), to reimburse each Fund for its Operating Expenses which,
in the aggregate, exceed by more than .10% the expense ratio per annum of a
certain other mutual fund ("Sister Fund") which also invests in the same
Portfolio. For the six months ended February 28, 1997, expenses (net of
reimbursement) incurred by each Fund amounted to .97%, 1.31%, .90%, 1.10%, and
.92%, of average daily net assets on an annualized basis for Focus, Genesis,
Guardian, Manhattan, and Partners, respectively.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New York
Stock Exchange and sub-adviser to each Portfolio. Several individuals who are
officers and/or trustees of the Trust are also principals of Neuberger and/or
officers and/or directors of Management.
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $63, $1,086, $357, and $69 for Focus, Genesis, Guardian, and
Partners, respectively, which is less than .01% of each Fund's average daily net
assets.
28
<PAGE>
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended February 28, 1997, additions and reductions in
each Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- -------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 51,628,802 $14,207,132
GENESIS 65,591,319 4,118,290
GUARDIAN 193,705,836 43,829,954
MANHATTAN 4,257,365 20,278,005
PARTNERS 107,467,786 4,128,001
</TABLE>
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent accountants/auditors. Annual
reports contain audited financial statements.
29
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Focus Trust(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
Six August
Months 30,
Ended 1993(2)
February to
28, August
1997 Year Ended August 31, 31,
(UNAUDITED) 1996 1995 1994 1993
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.83 $ 14.41 $ 11.36 $ 10.03 $10.00
-------------------------------------------------------
Income From Investment Operations
Net Investment Income .00 .06 .05 .05 --
Net Gains or Losses on Securities
(both realized and unrealized) 3.26 .46 3.05 1.31 .03
-------------------------------------------------------
Total From Investment Operations 3.26 .52 3.10 1.36 .03
-------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.06) (.02) (.05) (.02) --
Distributions (from capital gains) -- (.08) -- (.01) --
-------------------------------------------------------
Total Distributions (.06) (.10) (.05) (.03) --
-------------------------------------------------------
Net Asset Value, End of Period $18.03 $ 14.83 $ 14.41 $ 11.36 $10.03
-------------------------------------------------------
Total Return(3) +22.01%(4) +3.62% +27.44% +13.58% +0.30%(4)
-------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $107.4 $ 55.6 $ 14.5 $ 1.6 $ --
-------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) .97%(6) .99% .96% .85% .92%(6)
-------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(5) .16%(6) .63% .67% .92% .05%(6)
-------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
30
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Trust
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
Six August
Months 26,
Ended 1993(2)
February to
28, August
1997 Year Ended August 31, 31,
(UNAUDITED) 1996 1995 1994 1993
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.99 $ 12.65 $ 10.59 $ 10.05 $10.00
-------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.01) (.02) (.01) (.01) --
Net Gains or Losses on Securities
(both realized and unrealized) 1.79 2.68 2.08 .56 .05
-------------------------------------------------------
Total From Investment Operations 1.78 2.66 2.07 .55 .05
-------------------------------------------------------
Less Distributions
Distributions (from capital gains) (.14) (.32) (.01) (.01) --
-------------------------------------------------------
Net Asset Value, End of Period $16.63 $ 14.99 $ 12.65 $ 10.59 $10.05
-------------------------------------------------------
Total Return(3) +11.88%(4) +21.44% +19.51% +5.47% +0.50%(4)
-------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $136.1 $ 65.2 $ 30.6 $ 3.1 $ --
-------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) 1.31%(6) 1.38% 1.42% 1.36% 1.51%(6)
-------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets(5) (.24%)(6) (.27%) (.24%) (.21%) (.44%)(6)
-------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
31
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Trust
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
Six August
Months 3,
Ended 1993(2)
February to
28, August
1997 Year Ended August 31, 31,
(UNAUDITED) 1996 1995 1994 1993
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 14.24 $ 13.83 $ 11.27 $ 10.27 $10.00
---------------------------------------------------------
Income From Investment Operations
Net Investment Income .04 .16 .13 .09 --
Net Gains or Losses on Securities
(both realized and unrealized) 2.82 .55 2.55 .99 .27
---------------------------------------------------------
Total From Investment Operations 2.86 .71 2.68 1.08 .27
---------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.08) (.14) (.12) (.07) --
Distributions (from capital gains) (.23) (.16) -- (.01) --
---------------------------------------------------------
Total Distributions (.31) (.30) (.12) (.08) --
---------------------------------------------------------
Net Asset Value, End of Period $ 16.79 $ 14.24 $ 13.83 $ 11.27 $10.27
---------------------------------------------------------
Total Return(3) +20.21%(4) +5.19% +24.01% +10.57% +2.70%(4)
---------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $1,766.4 $1,340.1 $ 683.1 $ 75.8 $ --
---------------------------------------------------------
Ratio of Expenses to Average Net
Assets .90%(6) .92%(5) .90%(5) .80%(5) .81%(5)(6)
---------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .47%(6) 1.26%(5) 1.35%(5) 1.50%(5) 1.00%(5)(6)
---------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
32
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Trust
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
Six August
Months 30,
Ended 1993(2)
February to
28, August
1997 Year Ended August 31, 31,
(UNAUDITED) 1996 1995 1994 1993
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.18 $ 12.99 $ 10.37 $ 10.01 $10.00
-------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.03) (.04) -- .01 --
Net Gains or Losses on Securities
(both realized and unrealized) 2.47 (.34) 2.67 .36 .01
-------------------------------------------------------
Total From Investment Operations 2.44 (.38) 2.67 .37 .01
-------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- (.01) (.01) --
Distributions (from capital gains) (.92) (.43) (.04) -- --
-------------------------------------------------------
Total Distributions (.92) (.43) (.05) (.01) --
-------------------------------------------------------
Net Asset Value, End of Period $13.70 $ 12.18 $ 12.99 $ 10.37 $10.01
-------------------------------------------------------
Total Return(3) +20.61%(4) -2.98% +25.90% +3.70% +0.10%(4)
-------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 42.5 $ 48.2 $ 35.6 $ 12.1 $ --
-------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) 1.10%(6) 1.08% 1.06% .96% 1.04%(6)
-------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets(5) (.50%)(6) (.38%) (.03%) .16% 5.48%(6)
-------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
33
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Trust
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. The per share amounts and ratios which are shown reflect income and
expenses, including the Fund's proportionate share of its corresponding
Portfolio's income and expenses. It should be read in conjunction with its
corresponding Portfolio's Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period
from
Six August
Months 30,
Ended 1993(2)
February to
28, August
1997 Year Ended August 31, 31,
(UNAUDITED) 1996 1995 1994 1993
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.39 $ 12.68 $ 10.54 $ 10.01 $10.00
-------------------------------------------------------
Income From Investment Operations
Net Investment Income .03 .08 .05 .03 --
Net Gains or Losses on Securities
(both realized and unrealized) 3.09 1.59 2.19 .53 .01
-------------------------------------------------------
Total From Investment Operations 3.12 1.67 2.24 .56 .01
-------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.08) (.07) (.02) (.01) --
Distributions (from capital gains) (.64) (.89) (.08) (.02) --
-------------------------------------------------------
Total Distributions (.72) (.96) (.10) (.03) --
-------------------------------------------------------
Net Asset Value, End of Period $15.79 $ 13.39 $ 12.68 $ 10.54 $10.01
-------------------------------------------------------
Total Return(3) +23.55%(4) +13.76% +21.52% +5.61% +0.10%(4)
-------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $268.2 $ 128.5 $ 61.3 $ 4.7 $ --
-------------------------------------------------------
Ratio of Expenses to Average Net
Assets(5) .92%(6) .94% .92% .81% .84%(6)
-------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets(5) .56%(6) .84% .81% .47% 2.65%(6)
-------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
34
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger&Berman February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Trust
1) Prior to January 1, 1995, its name was Neuberger&Berman Selected Sectors
Trust.
2) The date investment operations commenced.
3) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each fiscal
period and assumes dividends and other distributions, if any, were
reinvested. Results represent past performance and do not guarantee future
results. Investment returns and principal may fluctuate and shares when
redeemed may be worth more or less than original cost. Total return would
have been lower if Management had not reimbursed certain expenses. In
addition, for Genesis, total return would have been lower if Management had
not waived a portion of the management fee.
4) Not annualized.
5) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
Period
from
August
Six 30,
Months 1993
Ended to
February August
28, Year Ended August 31, 31,
FOCUS 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 1.13% 1.27% 2.50% 2.50% 2.50%
---------------------------------------------
Net Investment Income (Loss) .00% .35% (.87%) (.73%) (1.53%)
---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period
from
August
3,
1993
to
August
Year Ended August 31, 31,
GUARDIAN 1996 1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Expenses .92% .96% 1.52% 2.50%
---------------------------------
Net Investment Income (Loss) 1.26% 1.29% .78% (.69%)
---------------------------------
</TABLE>
<TABLE>
<CAPTION>
Period
from
August
Six 30,
Months 1993
Ended to
February August
28, Year Ended August 31, 31,
MANHATTAN 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 1.31% 1.25% 1.46% 2.50% 2.50%
---------------------------------------------
Net Investment Income (Loss) (.71%) (.55%) (.43%) (1.38%) 4.02%
---------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Period
from
August
Six 30,
Months 1993
Ended to
February August
28, Year Ended August 31, 31,
PARTNERS 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 1.00% 1.06% 1.24% 2.50% 2.50%
---------------------------------------------
Net Investment Income (Loss) .48% .72% .49% (1.22%) .99%
---------------------------------------------
</TABLE>
After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements and the waiver of a portion of the management fee as
described in Note B of Notes to Financial Statements of Neuberger&Berman Genesis
Portfolio. Had Management not undertaken such action the annualized ratios to
average daily net assets would have been:
<TABLE>
<CAPTION>
Period
from
August
Six 26,
Months 1993
Ended to
February August
28, Year Ended August 31, 31,
GENESIS 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses 1.44% 1.65% 1.78% 2.50% 2.50%
---------------------------------------------
Net Investment Loss (.37%) (.54%) (.60%) (1.35%) (1.43%)
---------------------------------------------
</TABLE>
6) Annualized.
36
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. CITICORP 4.1%
2. General Motors 3.8%
3. Compaq Computer 3.6%
4. Travelers Group 3.3%
5. Aetna Inc. 3.2%
6. Chrysler Corp. 3.2%
7. Neiman-Marcus Group 3.1%
8. Fannie Mae 3.0%
9. Wellpoint Health Networks 2.8%
10. First USA 2.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (99.1%)
AUTOMOTIVE (10.5%)
445,900 Cabot Corp. $ 10,479
1,246,000 Chrysler Corp. 42,208
723,000 Exide Corp. 14,189
880,000 General Motors 50,930
675,920 LucasVarity PLC ADR 22,136
------------
139,942
------------
FINANCIAL SERVICES (37.6%)
472,800 ACE Ltd. 30,732
655,000 ADVANTA Corp. Class B 26,282
365,200 Bank of Boston 27,527
735,000 Capital One Financial 29,216
475,000 CITICORP 55,456
1,100,000 Countrywide Credit Industries 32,037
525,000 Dean Witter, Discover 20,147
285,000 EXEL Ltd. 12,576
1,260,000 Federal Home Loan Mortgage 37,485
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
992,000 Fannie Mae $ 39,680
780,500 First USA 37,952
232,200 ITT Hartford Group 17,415
285,000 Merrill Lynch 27,360
495,000 PartnerRe Ltd. 16,335
253,800 St. Paul Cos. 17,131
820,000 Travelers Group 43,973
105,000 Wells Fargo 31,946
------------
503,250
------------
HEALTH CARE (13.9%)
517,000 Aetna Inc. 42,846
390,000 Coventry Corp. 2,852
802,000 Foundation Health 30,276
590,000 Health Systems International 17,331
220,000 Mid Atlantic Medical Services 3,245
25,200 PacifiCare Health Systems
Class A 2,016
183,700 PacifiCare Health Systems
Class B 15,385
691,000 Sierra Health Services 18,225
326,300 United Healthcare 16,274
888,000 Wellpoint Health Networks 38,073
------------
186,523
------------
HEAVY INDUSTRY (10.4%)
1,030,000 AGCO Corp. 29,226
230,700 Cleveland-Cliffs 9,920
640,000 DT Industries 18,880 (2)
450,100 Harnischfeger Industries 19,748
367,200 IMC Global 12,806
1,013,600 Rollins Truck Leasing 14,191
804,600 UCAR International 34,598
------------
139,369
------------
</TABLE>
37
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (2.5%)
620,000 Cabletron Systems $ 18,600
310,000 Harcourt General 14,609
63,900 Scandinavian Broadcasting
System 855
------------
34,064
------------
RETAIL (9.1%)
300,000 Barnes & Noble 9,900
240,000 Dillard Department Stores 7,230
1,850,000 Furniture Brands International 27,288
860,000 Intimate Brands 16,770
1,565,000 Neiman-Marcus Group 42,059
429,800 Payless ShoeSource 18,481
------------
121,728
------------
TECHNOLOGY (13.8%)
410,000 3Com Corp. 13,575
350,000 Applied Materials 17,719
338,000 Arrow Electronics 18,970
590,000 Atmel Corp. 22,051
600,000 Compaq Computer 47,550 (3)
293,000 Komag, Inc. 8,790
650,000 Seagate Technology 30,713
385,000 Silicon Valley Group 8,229
222,500 Texas Instruments 17,160
------------
184,757
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- ------------
<C> <S> <C>
TRANSPORTATION (1.3%)
629,400 Continental Airlines Class B $ 18,017
------------
TOTAL COMMON STOCKS (COST
$910,278) 1,327,650
------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.4%)
$46,055,000 U.S. Treasury Bills, 4.85% -
4.935%, due 3/27/97 - 4/24/97
(COST $45,825) 45,835
------------
SHORT-TERM CORPORATE NOTES (0.8%)
10,370,000 General Electric Capital
Corp., 5.22%, due 3/3/97
(COST $10,370) 10,370 (4)
------------
TOTAL INVESTMENTS (103.3%)
(COST $966,473) 1,383,855 (5)
Liabilities, less cash,
receivables and other assets
[(3.3%)] (44,573 )
------------
TOTAL NET ASSETS (100.0%) $ 1,339,282
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
38
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Thiokol Corp. 3.2%
2. BMC Industries 2.7%
3. Texas Industries 2.4%
4. Bank United 2.1%
5. Dallas Semiconductor 2.0%
6. Pride Petroleum Services 1.9%
7. AAR Corp. 1.8%
8. AptarGroup Inc. 1.7%
9. Glendale Federal Bank 1.5%
10. Richfood Holdings 1.5%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (95.3%)
AEROSPACE (9.7%)
368,800 AAR Corp. $ 9,404
663,800 Aviall Inc. 7,385
154,700 BE Aerospace 3,751
128,100 DONCASTERS PLC ADR 2,546
199,900 Ducommun Inc. 4,798
79,300 Moog, Inc. Class A 1,883
207,000 Orbital Sciences 3,571
290,700 Thiokol Corp. 16,207
-------------
49,545
-------------
AGRICULTURE (0.5%)
68,149 Delta & Pine Land 2,530
-------------
AUTOMOTIVE (1.9%)
118,400 Donaldson Co. 3,981
67,800 Monaco Coach 1,356
115,900 Tower Automotive 4,448
-------------
9,785
-------------
BANKING & FINANCIAL (14.4%)
321,500 Bank United 10,529
76,150 Charter One Financial 3,627
180,000 Cullen/Frost Bankers 6,424
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
174,600 Dime Community Bancorp $ 3,230
156,700 First Commerce 6,503
290,400 Glendale Federal Bank 7,732
65,000 Long Island Bancorp 2,381
104,700 Ocean Financial 3,180
65,377 ONBANCorp, Inc. 2,917
95,000 Peoples Heritage Financial
Group 2,981
46,300 Queens County Bancorp 2,627
182,600 Reliance Bancorp 4,063
55,200 Roslyn Bancorp 862
423,450 Sterling Bancshares 6,352
105,200 Texas Regional Bancshares 3,432
170,900 Webster Financial 6,708
-------------
73,548
-------------
BUILDING, CONSTRUCTION & FURNISHINGS (4.3%)
367,200 Apogee Enterprises 7,298
73,000 Lincoln Electric Class A 2,391
208,700 Texas Industries 12,157
-------------
21,846
-------------
CHEMICALS (1.7%)
214,300 Lawter International 2,491
232,000 Lilly Industries 4,495
78,300 McWhorter Technologies 1,684
-------------
8,670
-------------
COMMUNICATIONS (1.0%)
170,300 Black Box 5,152
-------------
CONSUMER PRODUCTS & SERVICES (6.3%)
92,000 Alltrista Corp. 1,955
120,073 Block Drug 5,584
123,800 Bush Boake Allen 3,111
133,500 Coachmen Industries 2,703
137,000 First Brands 3,408
24,000 Marcus Corp. 522
392,800 Prime Hospitality 6,481
</TABLE>
39
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
351,100 Richfood Holdings $ 7,417
75,000 The First Years 1,256
-------------
32,437
-------------
DIAGNOSTIC EQUIPMENT (0.7%)
172,700 ADAC Laboratories 3,670
-------------
ELECTRONICS (6.1%)
224,800 Continental Circuits 3,007
401,700 Dallas Semiconductor 10,444
70,500 Fusion Systems 1,921
160,200 Kent Electronics 4,406
70,000 Nu Horizons 647
326,800 Pioneer Standard Electronics 4,575
119,000 SCI Systems 6,367
-------------
31,367
-------------
ENERGY (4.8%)
164,700 Apache Corp. 5,332
127,300 Aquila Gas Pipeline 1,671
182,500 Cairn Energy USA 1,779
623,000 Coho Energy 4,906
81,200 Cross Timbers Oil 2,192
54,200 Flores & Rucks 2,439
243,800 Offshore Energy Development 2,987
409,600 Unit Corp. 3,226
-------------
24,532
-------------
ENTERTAINMENT (0.1%)
115,575 Casino Data Systems 664
-------------
HEALTH CARE (3.9%)
123,100 Ballard Medical Products 2,416
101,600 EmCare Holdings 2,794
195,100 Kinetic Concepts 2,902
88,100 Patterson Dental 2,995
91,900 Sofamor Danek Group 3,642
151,200 Universal Health Services
Class B 5,160
-------------
19,909
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
INDUSTRIAL & COMMERCIAL
PRODUCTS & SERVICES (11.7%)
115,000 Alamo Group $ 1,768
481,800 BMC Industries 13,792
96,500 Dionex Corp. 4,342
108,000 Hexcel Corp. 2,079
142,850 Holophane Corp. 3,089
85,600 Kaydon Corp. 3,702
134,100 Libbey Inc. 4,023
191,700 NN Ball & Roller 2,157
202,400 Peak Technologies Group 2,176
107,000 Pentair, Inc. 3,357
40,000 Roper Industries 1,610
139,900 SOS Staffing Services 1,731
149,800 W.H. Brady 3,988
94,200 Wallace Computer Services 3,191
168,100 Wolverine Tube 6,178
155,750 Woodhead Industries 2,414
-------------
59,597
-------------
INSURANCE (1.5%)
37,900 American Heritage Life 986
165,300 FBL Financial Group 3,843
2,600 MMI Cos. 59
40,000 Orion Capital 2,560
-------------
7,448
-------------
MACHINERY & EQUIPMENT (1.4%)
59,000 Allied Products 1,725
199,800 Stewart & Stevenson Services 5,220
-------------
6,945
-------------
METALS (0.3%)
92,800 Commonwealth Aluminum 1,670
-------------
OFFICE EQUIPMENT (0.8%)
261,600 DH Technology 4,382
-------------
OIL SERVICES (13.1%)
50,300 Cliffs Drilling 2,333
138,800 Dawson Production Services 1,613
</TABLE>
40
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
185,400 Dreco Energy Services $ 6,628
153,900 Drilex International 1,751
161,000 Falcon Drilling 5,454
116,700 Global Industries 2,130
88,500 Hvide Marine 1,836
373,200 Nabors Industries 5,738
183,800 National-Oilwell 5,652
409,900 Oceaneering International 6,507
311,400 Offshore Logistics 5,683
587,000 Pride Petroleum Services 9,832
104,700 Production Operators 5,117
127,400 Smith International 5,176
105,100 Tuboscope VETCO 1,366
-------------
66,816
-------------
PACKING & CONTAINERS (1.7%)
214,200 AptarGroup Inc. 8,514
-------------
PUBLISHING & BROADCASTING (1.6%)
86,000 Central Newspapers 3,956
87,500 McClatchy Newspapers 2,089
45,666 Pulitzer Publishing 2,198
-------------
8,243
-------------
RECREATIONAL EQUIPMENT (0.1%)
23,000 RockShox, Inc. 385
-------------
RETAILING (0.7%)
90,000 99 Cents Only Stores 1,620
119,000 Schultz Sav-O Stores 1,889
-------------
3,509
-------------
TECHNOLOGY (5.9%)
43,800 Analysts International 1,183
527,600 Auspex Systems 6,133
474,100 Borland International 3,852
192,600 CACI International 3,250
121,900 Computer Data Systems 3,627
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
84,400 Logicon, Inc. $ 3,186
131,300 Methode Electronics Class A 2,084
250,000 Reynolds & Reynolds 7,000
-------------
30,315
-------------
TEXTILES & APPAREL (0.5%)
66,000 St. John Knits 2,706
-------------
TRANSPORTATION, SHIPPING & FREIGHT (0.6%)
52,250 Air Express International 1,620
213,600 Maritrans Inc. 1,308
-------------
2,928
-------------
TOTAL COMMON STOCKS (COST
$393,287) 487,113
-------------
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.6%)
$18,385,000 U.S. Treasury Bills, 4.91% -
4.975%, due 3/13/97 - 4/3/97
(COST $18,304) 18,309
-------------
CORPORATE COMMERCIAL PAPER (0.2%)
1,150,000 General Electric Capital
Corp., 5.22%, due 3/3/97
(COST $1,150) 1,150 (4)
-------------
TOTAL INVESTMENTS (99.1%)
(COST $412,741) 506,572 (5)
Cash, receivables and other
assets, less liabilities
(0.9%) 4,348
-------------
TOTAL NET ASSETS (100.0%) $ 510,920
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
41
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Motors 3.2%
2. First USA 2.8%
3. CITICORP 2.8%
4. Aetna Inc. 2.7%
5. Chrysler Corp. 2.7%
6. Compaq Computer 2.4%
7. Foundation Health 2.3%
8. Fannie Mae 2.2%
9. Merrill Lynch 2.0%
10. Travelers Group 1.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (97.0%)
AGRICULTURE (3.0%)
3,093,500 AGCO Corp. $ 87,778
3,960,000 IMC Global 138,105
------------
225,883
------------
AUTOMOTIVE (10.7%)
2,541,400 Cabot Corp. 59,723
6,000,000 Chrysler Corp. 203,250
4,852,400 Coltec Industries 88,556 (2)
4,201,500 General Motors 243,162
3,852,486 LucasVarity PLC ADR 126,169
883,500 Magna International Class A 46,384
1,587,697 Mark IV Industries 36,914
------------
804,158
------------
BANKING (6.9%)
1,554,600 Bank of Boston 117,178
1,820,000 CITICORP 212,485
504,000 First Tennessee National 23,562
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
720,000 Signet Banking $ 22,860
470,000 Wells Fargo 142,997
------------
519,082
------------
DRUGS (0.6%)
480,000 Zeneca Group ADR 42,240
------------
ELECTRONICS (1.9%)
2,210,000 Atmel Corp. 82,599
2,200,000 Teradyne, Inc. 59,950
------------
142,549
------------
ENERGY (4.2%)
3,028,500 Chesapeake Energy 62,841
2,062,500 Enron Oil & Gas 41,766
61,000 Norsk Hydro ADR 3,050
2,297,414 Union Pacific Resources Group 55,999
1,670,000 Unocal Corp. 64,504
1,617,500 Vastar Resources 46,908
1,702,000 Zeigler Coal Holding 43,188 (2)
------------
318,256
------------
FINANCIAL SERVICES (16.9%)
30,000 ADVANTA Corp. Class A 1,241
3,400,000 ADVANTA Corp. Class B 136,425 (2)
216,485 Alleghany Corp. 46,192
2,644,500 Capital One Financial 105,119
4,800,000 Countrywide Credit Industries 139,800
2,900,000 Dean Witter, Discover 111,288
3,100,000 Federal Home Loan Mortgage 92,225
4,080,000 Fannie Mae 163,200
4,388,600 First USA 213,396
1,121,475 MBNA Corp. 35,887
1,600,000 Merrill Lynch 153,600
390,000 MGIC Investment 30,664
</TABLE>
42
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
510,000 Security Capital Industrial
Trust $ 11,220
1,040,000 Spieker Properties 37,830
------------
1,278,087
------------
FOOD PRODUCTS (1.0%)
3,335,700 IBP, Inc. 77,555
------------
FOREST PRODUCTS & PAPER (2.8%)
1,105,000 Champion International 48,758
1,200,000 Fort Howard 35,700
470,200 Mead Corp. 27,389
717,400 Temple-Inland 39,547
101,400 Union Camp 4,892
907,000 Willamette Industries 58,048
------------
214,334
------------
HEALTH CARE (6.2%)
4,580,000 Foundation Health 172,895 (2)
1,875,000 Health Systems International 55,078
4,140,400 Humana Inc. 81,255
1,901,800 Mid Atlantic Medical Services 28,052
85,842 PacifiCare Health Systems
Class A 6,867
357,790 PacifiCare Health Systems
Class B 29,965
2,126,396 Wellpoint Health Networks 91,169
------------
465,281
------------
HEAVY INDUSTRY (2.5%)
1,080,000 Aluminum Co. of America 76,950
2,671,900 UCAR International 114,892 (2)
------------
191,842
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
INDUSTRIAL GOODS & SERVICES (2.6%)
1,655,200 American Standard $ 74,484
763,800 Phelps Dodge 54,612
2,002,500 USG Corp. 70,588
------------
199,684
------------
INSURANCE (7.1%)
2,500,000 Aetna Inc. 207,188
507,500 American International Group 61,407
508,600 Chubb Corp. 29,817
691,600 ITT Hartford Group 51,870
300,000 St. Paul Cos. 20,250
263,500 Transatlantic Holdings 22,233
2,726,666 Travelers Group 146,217
------------
538,982
------------
MEDIA & ENTERTAINMENT (4.4%)
1,100,000 Comcast Corp. Class A 19,181
2,700,000 Comcast Corp. Class A Special 48,262
1,550,000 Harcourt General 73,044
710,000 Jones Intercable Inc. Class A 6,834
1,700,000 Time Warner 69,700
280,000 United International Holdings 2,870
1,300,000 Viacom Inc. Class B 45,825
1,405,000 Vodafone Group ADR 66,738
------------
332,454
------------
PACKAGING & CONTAINERS (0.9%)
2,668,700 Owens-Illinois 64,382
------------
</TABLE>
43
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUSTS (0.6%)
1,405,000 CWM Mortgage Holdings $ 32,491
430,400 Hospitality Properties Trust 13,934 (2)
------------
46,425
------------
RETAIL (1.8%)
885,000 Barnes & Noble 29,205
1,906,500 Fingerhut Cos. 27,883 (2)
2,860,000 Wal-Mart Stores 75,432
------------
132,520
------------
TECHNOLOGY (16.8%)
2,411,800 3Com Corp. 79,853
1,550,000 Applied Materials 78,469
1,475,000 Arrow Electronics 82,784
1,367,500 Avnet, Inc. 85,469
2,864,500 Cabletron Systems 85,935
2,270,000 Compaq Computer 179,898
2,250,000 Digital Equipment 73,687
575,000 Intel Corp. 81,578
2,200,000 KLA Instruments 91,712
1,752,000 Komag, Inc. 52,560
1,208,000 Linear Technology 54,964
1,043,300 LSI Logic 35,994 (3)
203,717 Lucent Technologies 10,975
1,435,200 National Semiconductor 37,495
2,570,000 Seagate Technology 121,433
1,525,000 Texas Instruments 117,616
------------
1,270,422
------------
TELECOMMUNICATIONS (3.1%)
2,280,000 360 Communications 49,305
2,825,000 Airtouch Communications 76,981
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
2,212,000 Tele-Communications
International $ 29,862
450,000 Tele-Communications,
Inc. Class A 5,344
3,975,000 U.S. West Media Group 73,040
------------
234,532
------------
TRANSPORTATION (3.0%)
816,100 Continental Airlines Class B 23,361
855,000 Delta Air Lines 68,828
2,000,000 Ryder System 63,000
650,000 Union Pacific 39,162
1,257,000 USFreightways Corp. 30,325 (2)
------------
224,676
------------
TOTAL COMMON STOCKS (COST
$5,289,213) 7,323,344
------------
PREFERRED STOCKS (0.6%)
52,430 Aetna Inc., Ser. C, Cv., 6.25% 4,227
605,700 Airtouch Communications, Ser.
B, Cv., 6.00% 17,792
388,994 Airtouch Communications, Ser.
C, Cv., 4.25% 18,769
125,000 PacifiCare Health Systems,
Ser. C, Cv., $1.00 4,063
------------
TOTAL PREFERRED STOCKS (COST
$35,476) 44,851
------------
</TABLE>
44
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
CONVERTIBLE BONDS (0.2%)
$15,000,000 International CableTel Inc.,
Cv. Sub. Notes, 7.25%, due
4/15/05 (COST $14,997) $ 14,156(6)
------------
U.S. TREASURY SECURITIES (4.7%)
338,545,000 U.S. Treasury Bills, 4.86% -
5.29%, due 3/6/97 - 4/24/97 337,743
15,000,000 U.S. Treasury Notes, 8.00%,
due 5/15/01 15,905
------------
TOTAL U.S. TREASURY SECURITIES
(COST $352,509) 353,648
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES (1.2%)
$89,240,000 General Electric Capital
Corp., 5.22% - 5.26%, due
3/3/97 - 3/13/97 (COST
$89,240) $ 89,240(4)
------------
TOTAL INVESTMENTS (103.7%)
(COST $5,781,435) 7,825,239(5)
Liabilities, less cash,
receivables and other assets
[(3.7%)] (278,340)
------------
TOTAL NET ASSETS (100.0%) $7,546,899
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
45
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Nutrition 3.1%
2. CITICORP 3.0%
3. Wells Fargo 2.7%
4. GTECH Holdings 2.6%
5. Harrah's Entertainment 2.4%
6. Capital One Financial 2.4%
7. United Healthcare 2.4%
8. First USA 2.2%
9. KLA Instruments 2.1%
10. Staples Inc. 2.1%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
COMMON STOCKS (99.4%)
CHEMICALS (1.7%)
5,000 SGL Carbon (Ordinary Shares) $ 682
65,000 SGL Carbon ADR 2,958
145,000 UCAR International 6,235
-------------
9,875
-------------
COMMUNICATIONS (7.6%)
395,000 Airtouch Communications 10,764
585,000 Comcast Corp. Class A Special 10,457
680,000 Comcast UK Cable Partners
Limited 7,990
290,000 ECI Telecommunications 6,887
415,000 International CableTel 8,041
-------------
44,139
-------------
CONSUMER GOODS & SERVICES (8.2%)
510,000 Authentic Fitness 7,395
490,000 CUC International 11,699
175,000 Luxottica Group ADR 10,194
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
480,000 Nu-Kote Holding $ 2,700
80,000 Philip Morris 10,810
315,000 Regis Corp. 5,158
-------------
47,956
-------------
DRUGS & HEALTH CARE (12.2%)
510,000 Coventry Corp. 3,729
285,000 Healthsource Inc. 5,949
260,000 Nellcor Puritan Bennett 4,518
110,000 Novartis AG ADR 6,298
100,000 PacifiCare Health Systems
Class B 8,375
95,000 R.P. Scherer 5,486
115,000 Sierra Health Services 3,033
280,000 United Healthcare 13,965
70,300 Warner-Lambert 5,905
190,000 Watson Pharmaceuticals 8,289
120,000 Wellpoint Health Networks 5,145
-------------
70,692
-------------
ENTERTAINMENT (9.7%)
150,000 Circus Circus Enterprises 4,687
475,000 GTECH Holdings 14,903
760,000 Harrah's Entertainment 14,060
750,000 Players International 4,031
215,000 Promus Hotel 7,606
545,000 Showboat, Inc. 11,173
-------------
56,460
-------------
FINANCIAL SERVICES (18.5%)
210,000 Bear Stearns 6,300
352,400 Capital One Financial 14,008
150,000 CITICORP 17,512
140,000 Finova Group 10,692
257,000 First USA 12,497
360,000 MBNA Corp. 11,520
80,000 Merrill Lynch 7,680
</TABLE>
46
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
185,000 Morgan Stanley Group $ 11,678
51,000 Wells Fargo 15,517
-------------
107,404
-------------
INSURANCE (8.6%)
165,000 ACE Ltd. 10,725
160,000 EXEL Ltd. 7,060
295,000 Highlands Insurance 6,637
85,000 Loews Corp. 8,681
155,000 PennCorp Financial Group 5,425
215,333 Travelers Group 11,547
-------------
50,075
-------------
OIL & GAS (0.3%)
35,000 Enron Oil & Gas 709
30,000 Noble Affiliates 1,170
-------------
1,879
-------------
RESTAURANTS (6.9%)
659,450 Buffets Inc. 4,740
420,000 Cheesecake Factory 8,925
610,000 CKE Restaurants 11,819
170,000 IHOP Corp. 4,398
223,500 Lone Star Steakhouse & Saloon 5,923
230,000 Sonic Corp. 4,169
-------------
39,974
-------------
SPECIALTY RETAIL (11.3%)
168,000 Federated Department Stores 5,838
985,000 General Nutrition 17,730
345,000 Intimate Brands 6,727
190,000 Lowe's Cos. 6,935
140,000 Office Depot 2,660
560,000 Staples Inc. 12,110
240,000 Viking Office Products 5,670
295,000 Wal-Mart Stores 7,781
-------------
65,451
-------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ---------- -------------
<C> <S> <C>
TECHNOLOGY (13.6%)
335,000 Informix Corp. $ 5,821
75,000 Intel Corp. 10,641
295,000 KLA Instruments 12,298
250,000 LSI Logic 8,625
305,000 Micron Technology 11,437
110,000 Nokia Corp. ADR 6,435
55,000 SAP AG (Ordinary Shares) 8,465
125,000 Seagate Technology 5,906
110,000 Texas Instruments 8,484
100,000 Xeikon N.V. ADR 901
-------------
79,013
-------------
TRANSPORTATION (0.8%)
250,000 RailTex Inc. 4,531
-------------
TOTAL COMMON STOCKS (COST
$449,499) 577,449
-------------
RIGHTS (0.0%)
3,500 Ciba Specialty Chemicals
Holding, Expire 3/12/97 (COST
$0) 220
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ----------
<C> <S> <C>
U.S. TREASURY SECURITIES (3.9%)
$22,960,000 U.S. Treasury Bills, 4.89% -
4.935%, due 3/6/97 - 4/17/97
(COST $22,896) 22,903
-------------
TOTAL INVESTMENTS (103.3%)
(COST $472,395) 600,572(5)
Liabilities, less cash,
receivables and other assets
[(3.3%)] (19,468)
-------------
TOTAL NET ASSETS (100.0%) $ 581,104
-------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
47
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Columbia/HCA Healthcare 2.6%
2. Costco Cos. 2.5%
3. Wells Fargo 2.5%
4. Texas Instruments 2.1%
5. EXEL Ltd. 2.1%
6. duPont 2.0%
7. Allstate Corp. 1.9%
8. Wal-Mart Stores 1.9%
9. Knight-Ridder 1.8%
10. American Express 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (94.0%)
AIRLINES (0.6%)
570,300 Continental Airlines Class B $ 16,325
------------
AUTOMOTIVE (0.4%)
290,800 Chrysler Corp. 9,851
------------
BANKING & FINANCIAL SERVICES (8.6%)
725,000 American Express 47,397
989,500 Capital One Financial 39,333
331,400 CITICORP 38,691
1,303,400 Countrywide Credit Industries 37,961
217,800 Wells Fargo 66,266
------------
229,648
------------
BUILDING, CONSTRUCTION & REFURNISHING (1.7%)
1,300,000 USG Corp. 45,825
------------
CHEMICALS (4.7%)
500,000 duPont 53,625
398,500 Great Lakes Chemical 18,480
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
947,700 Morton International $ 39,093
273,500 W.R. Grace 14,496
------------
125,694
------------
COMMUNICATIONS (1.5%)
1,450,500 Airtouch Communications 39,526
------------
CONSUMER GOODS & SERVICES (3.0%)
1,535,000 Fort Howard 45,666
756,900 Tupperware Corp. 33,872
------------
79,538
------------
ELECTRONICS (3.5%)
364,500 Analog Devices 8,474
858,500 KLA Instruments 35,789
1,443,100 Loral Space & Communications 23,270
469,700 Varian Associates 27,125
------------
94,658
------------
ENTERTAINMENT (5.1%)
965,200 Evergreen Media 28,956
1,674,100 Mirage Resorts 41,643
760,300 Royal Caribbean Cruises 22,239
1,100,000 Time Warner 45,100
------------
137,938
------------
FOOD & DRUG STORES (1.0%)
632,600 Revco D.S. 25,858
------------
FOOD & TOBACCO (3.2%)
1,350,200 IBP, Inc. 31,392
305,100 Philip Morris 41,227
350,000 RJR Nabisco Holdings 12,819
------------
85,438
------------
HEALTH CARE (4.3%)
1,690,550 Columbia/HCA Healthcare 71,003
798,642 Novartis AG ADR 45,722
------------
116,725
------------
</TABLE>
48
<PAGE>
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
INDUSTRIAL GOODS & SERVICES (6.0%)
931,400 AK Steel Holding $ 33,531
695,400 Goodyear Tire & Rubber 36,682
875,764 LucasVarity PLC ADR 28,681
1,783,300 Owens-Illinois 43,022
450,000 XTRA Corp. 18,253
------------
160,169
------------
INSURANCE (11.3%)
790,800 Allstate Corp. 50,117
1,255,400 Equitable Cos. 39,388
1,270,100 EXEL Ltd. 56,043
273,500 MBIA, Inc. 26,700
641,775 Orion Capital 41,074
669,200 Progressive Corp. 44,251
852,200 Travelers Group 45,699
------------
303,272
------------
MEDIA (3.9%)
2,540,281 Comcast Corp. Class A Special 45,407
269,500 E.W. Scripps 9,702
1,245,000 Knight-Ridder 49,489
------------
104,598
------------
OIL & GAS (6.1%)
800,000 Cabot Corp. 18,800
2,957,500 Gulf Canada Resources 20,702
695,500 Noble Affiliates 27,124
269,800 Schlumberger, Ltd. 27,149
780,950 Tejas Gas 34,167
1,495,055 Union Pacific Resources Group 36,442
------------
164,384
------------
OIL SERVICES (1.0%)
629,900 Tidewater Inc. 27,086
------------
PUBLISHING & BROADCASTING (0.4%)
1,208,800 Hollinger International 12,239
------------
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
RAILROADS (2.6%)
465,000 Burlington Northern Santa Fe $ 38,711
500,000 Union Pacific 30,125
------------
68,836
------------
REAL ESTATE (3.6%)
200,700 CBL & Associates Properties 4,992
600,000 Del Webb 9,675
1,900,000 Host Marriott 34,200
200,000 Macerich Co. 5,525
873,500 Security Capital Industrial
Trust 19,217
1,607,700 Security Capital U.S. Realty 22,508 (6)
------------
96,117
------------
RESTAURANTS (1.6%)
978,600 McDonald's Corp. 42,324
------------
RETAILING (4.7%)
800,000 Harcourt General 37,700
699,000 Home Depot 38,095
1,881,400 Wal-Mart Stores 49,622
------------
125,417
------------
RETAILING & APPAREL (3.3%)
2,600,000 Costco Cos. 66,625
600,000 Nordstrom, Inc. 22,050
------------
88,675
------------
SPECIALTY CHEMICAL (1.3%)
832,000 Millipore Corp. 35,880
------------
TECHNOLOGY (10.6%)
530,000 Applied Materials 26,831
474,700 Autodesk, Inc. 16,081
533,100 Cabletron Systems 15,993
1,030,000 Komag, Inc. 30,900
774,100 NCR Corp. 25,545
952,900 Seagate Technology 45,025
761,200 Sundstrand Corp. 33,207
</TABLE>
49
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger&Berman February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Value(1)
Number (000's
of Shares omitted)
- ----------- ------------
<C> <S> <C>
734,600 Texas Instruments $ 56,656
554,300 Xerox Corp. 34,644
------------
284,882
------------
TOTAL COMMON STOCKS (COST
$1,976,161) 2,520,903
------------
PREFERRED STOCKS (0.7%)
566,700 Fresenius National Medical
Care, Class D 57
280,000 Loral Space & Communications,
Cv., 6.00% 14,210 (6)
550,000 RJR Nabisco, Ser. C, Dep.
Shares 3,919
------------
TOTAL PREFERRED STOCKS (COST
$17,784) 18,186
------------
RIGHTS (0.1%)
39,932 Ciba Specialty Chemicals
Holding, Expire 3/12/97 (COST
$0) 2,516
------------
<CAPTION>
Market
Value(1)
Principal (000's
Amount omitted)
- ----------- ------------
<C> <S> <C>
U.S. TREASURY SECURITIES (5.0%)
$134,580,000 U.S. Treasury Bills, 4.88% -
5.00%, due 3/6/97 - 4/24/97
(COST $134,244) $ 134,284
------------
SHORT-TERM CORPORATE NOTES (1.7%)
46,500,000 General Electric Capital
Corp., 5.22%, due 3/3/97
(COST $46,500) 46,500 (4)
------------
TOTAL INVESTMENTS (101.5%)
(COST $2,174,689) 2,722,389 (5)
Liabilities, less cash,
receivables and other assets
[(1.5%)] (40,996 )
------------
TOTAL NET ASSETS (100.0%) $ 2,681,393
------------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
50
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
1) Investment securities of each Portfolio are valued at the latest sales price;
securities for which no sales were reported, unless otherwise noted, are
valued at the mean between the closing bid and asked prices. The Portfolios
value all other securities by a method that the trustees of Equity Managers
Trust believe accurately reflects fair value. Foreign security prices are
furnished by independent quotation services expressed in local currency
values. Foreign security prices are translated from the local currency into
U.S. dollars using current exchange rates. Short-term debt securities with
less than 60 days until maturity may be valued at cost which, when combined
with interest earned, approximates market value.
2) Affiliated Issuer (see Note E of Notes to Financial Statements).
3) The following securities were held in escrow at February 28, 1997 to cover
outstanding call options written:
<TABLE>
<CAPTION>
SECURITIES AND MARKET VALUE PREMIUM ON MARKET VALUE
NEUBERGER&BERMAN SHARES OPTIONS OF SECURITIES OPTIONS OF OPTIONS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOCUS PORTFOLIO 60,000 Compaq Computer $ 4,755,000 $ 125,696 $ 22,500
March 1997 @ 90
GUARDIAN PORTFOLIO 500,000 LSI Logic $ 17,250,000 $1,147,461 $1,281,250
April 1997 @ 35
</TABLE>
4) At cost, which approximates market value.
5) At February 28, 1997, selected Portfolio information on a Federal income tax
basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOCUS PORTFOLIO $ 966,867,000 $ 438,296,000 $ 21,308,000 $ 416,988,000
GENESIS PORTFOLIO 412,741,000 99,877,000 6,046,000 93,831,000
GUARDIAN PORTFOLIO 5,782,750,000 2,165,388,000 122,899,000 2,042,489,000
MANHATTAN PORTFOLIO 472,452,000 158,383,000 30,263,000 128,120,000
PARTNERS PORTFOLIO 2,179,284,000 561,414,000 18,309,000 543,105,000
</TABLE>
6) Security exempt from registration under the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers under Rule 144A. At February 28, 1997,
these securities amounted to $14,156,000 or .2% of net assets for
Neuberger&Berman Guardian Portfolio, and $36,718,000 or 1.4% of net assets
for Neuberger&Berman Partners Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
(000'S OMITTED) PORTFOLIO PORTFOLIO
-------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 1,364,975 $ 506,572
Non-controlled affiliated issuers 18,880 --
-------------------------------
1,383,855 506,572
Cash 3,050 5
Deferred organization costs (Note A) 12 3
Dividends and interest receivable 807 293
Prepaid expenses and other assets 23 7
Receivable for securities sold 9,893 4,960
-------------------------------
1,397,640 511,840
-------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) 23 --
Payable for collateral on securities loaned
(Note A) 37,879 --
Payable for securities purchased 19,736 592
Payable to investment manager (Note B) 518 280
Accrued expenses 202 48
-------------------------------
58,358 920
-------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 1,339,282 $ 510,920
-------------------------------
NET ASSETS consist of:
Paid-in capital $ 921,797 $ 417,089
Net unrealized appreciation in value of
investment securities and option contracts
written 417,485 93,831
-------------------------------
NET ASSETS $ 1,339,282 $ 510,920
-------------------------------
*Cost of investments:
Unaffiliated issuers $ 944,686 $ 412,741
Non-controlled affiliated issuers 21,787 --
-------------------------------
Total cost of investments $ 966,473 $ 412,741
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 7,269,283 $ 600,572 $ 2,722,389
Non-controlled affiliated issuers 555,956 -- --
------------------------------------------------
7,825,239 600,572 2,722,389
Cash 42 2,497 1
Deferred organization costs (Note A) 36 14 25
Dividends and interest receivable 5,786 120 1,797
Prepaid expenses and other assets 116 15 51
Receivable for securities sold 32,321 3,065 12,676
------------------------------------------------
7,863,540 606,283 2,736,939
------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) 1,281 -- --
Payable for collateral on securities loaned
(Note A) 200,188 21,345 6,849
Payable for securities purchased 111,780 3,485 47,593
Payable to investment manager (Note B) 2,569 243 945
Accrued expenses 823 106 159
------------------------------------------------
316,641 25,179 55,546
------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 7,546,899 $ 581,104 $ 2,681,393
------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 5,503,228 $ 452,927 $ 2,133,693
Net unrealized appreciation in value of
investment securities and option contracts
written 2,043,671 128,177 547,700
------------------------------------------------
NET ASSETS $ 7,546,899 $ 581,104 $ 2,681,393
------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 5,289,254 $ 472,395 $ 2,174,689
Non-controlled affiliated issuers 492,181 -- --
------------------------------------------------
Total cost of investments $ 5,781,435 $ 472,395 $ 2,174,689
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
53
<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 $ 6,257 $ 1,444
Dividend income -- non-controlled affiliated
issuers 12 --
Interest income 611 517
Foreign taxes withheld (Note A) (28) --
---------------------------
Total income 6,852 1,961
---------------------------
Expenses:
Investment management fee (Note B) 3,096 1,538
Accounting fees 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 5 1
Auditing fees 21 11
Custodian fees (Note B) 148 64
Insurance expense 12 2
Legal fees 8 19
Trustees' fees and expenses 9 5
Miscellaneous -- 10
---------------------------
Total expenses 3,304 1,655
Fee waived by the investment manager (Note
B) -- (184)
---------------------------
Total net expenses 3,304 1,471
---------------------------
Net investment income 3,548 490
---------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 112,150 2,792
Net realized loss on investment securities
sold in non-controlled affiliated issuers -- --
Net realized loss on option contracts written
(Note A) (643) --
Change in net unrealized appreciation of
investment securities and option contracts
written 131,395 32,610
---------------------------
Net gain on investments 242,902 35,402
---------------------------
Net increase in net assets resulting from
operations $ 246,450 $ 35,892
---------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
For the Six Months Ended February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 38,991 $ 1,577 $ 14,625
Dividend income -- non-controlled affiliated
issuers 888 -- --
Interest income 7,768 191 2,544
Foreign taxes withheld (Note A) (239) (14) (39)
------------------------------------------------
Total income 47,408 1,754 17,130
------------------------------------------------
Expenses:
Investment management fee (Note B) 15,220 1,536 5,424
Accounting fees 5 5 5
Amortization of deferred organization and
initial offering expenses (Note A) 13 5 9
Auditing fees 25 17 22
Custodian fees (Note B) 512 121 199
Insurance expense 64 7 22
Legal fees 9 13 9
Trustees' fees and expenses 37 5 14
Miscellaneous -- -- --
------------------------------------------------
Total expenses 15,885 1,709 5,704
Fee waived by the investment manager (Note
B) -- -- --
------------------------------------------------
Total net expenses 15,885 1,709 5,704
------------------------------------------------
Net investment income 31,523 45 11,426
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment securities
sold in unaffiliated issuers 278,687 64,034 151,459
Net realized loss on investment securities
sold in non-controlled affiliated issuers (48,143) -- --
Net realized loss on option contracts written
(Note A) (2,991) -- --
Change in net unrealized appreciation of
investment securities and option contracts
written 1,018,651 45,541 319,744
------------------------------------------------
Net gain on investments 1,246,204 109,575 471,203
------------------------------------------------
Net increase in net assets resulting from
operations $ 1,277,727 $ 109,620 $ 482,629
------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Six Months Six Months
Ended Year Ended Year
February 28, Ended February 28, Ended
1997 August 31, 1997 August 31,
(000'S OMITTED) (UNAUDITED) 1996 (UNAUDITED) 1996
------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 3,548 $ 11,390 $ 490 $ 471
Net realized gain on investments 111,507 51,701 2,792 5,660
Change in net unrealized
appreciation of investments 131,395 (21,728) 32,610 27,635
------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 246,450 41,363 35,892 33,766
------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 96,472 231,514 222,919 110,968
Reductions (126,011 ) (119,679) (7,755 ) (27,030 )
------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (29,539 ) 111,835 215,164 83,938
------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 216,911 153,198 251,056 117,704
NET ASSETS:
Beginning of period 1,122,371 969,173 259,864 142,160
------------------------------------------------------
End of period $ 1,339,282 $ 1,122,371 $ 510,920 $ 259,864
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
- ----------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 28, Ended February 28, Ended February 28, Ended
1997 August 31, 1997 August 31, 1997 August 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 31,523 $ 97,934 $ 45 $ 829 $ 11,426 $ 23,394
Net realized gain on investments 227,553 307,410 64,034 59,509 151,459 240,765
Change in net unrealized
appreciation of investments 1,018,651 (111,192) 45,541 (74,167 ) 319,744 (30,217)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 1,277,727 294,152 109,620 (13,829 ) 482,629 233,942
----------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 284,106 1,540,028 26,138 70,833 291,119 309,196
Reductions (247,476 ) (214,834) (122,080 ) (134,984 ) (91,958 ) (167,061)
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests 36,630 1,325,194 (95,942 ) (64,151 ) 199,161 142,135
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 1,314,357 1,619,346 13,678 (77,980 ) 681,790 376,077
NET ASSETS:
Beginning of period 6,232,542 4,613,196 567,426 645,406 1,999,603 1,623,526
----------------------------------------------------------------------------------
End of period $ 7,546,899 $ 6,232,542 $ 581,104 $ 567,426 $ 2,681,393 $ 1,999,603
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 28, 1997 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus"), Neuberger&Berman Genesis
Portfolio ("Genesis"), Neuberger&Berman Guardian Portfolio ("Guardian"),
Neuberger&Berman Manhattan Portfolio ("Manhattan"), and Neuberger&Berman
Partners Portfolio ("Partners") (collectively, the "Portfolios") are separate
operating series of Equity Managers Trust ("Managers Trust"), a New York
common law trust organized as of December 1, 1992. Managers Trust is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). Other regulated
investment companies sponsored by Neuberger&Berman Management Incorporated
("Management"), whose financial statements are not presented herein, also
invest in Managers Trust.
The assets of each series belong only to that series, and the liabilities
of each series are borne solely by that series and no other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. Interest income, accretion of original issue
discount, where applicable, and accretion of discount on short-term
investments is recorded on the accrual basis. Realized gains and losses from
securities transactions and foreign currency transactions are recorded on the
basis of identified cost.
5) FEDERAL INCOME TAXES: Managers Trust intends to comply with the requirements
of the Internal Revenue Code of 1986, as amended. Each Portfolio of Managers
Trust also intends to conduct its operations so that each of its investors
will be able to qualify as a regulated investment company. Each Portfolio
will be treated as a partnership for U.S. Federal income tax purposes and is
therefore not subject to U.S. Federal income tax.
58
<PAGE>
6) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
7) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection with
its organization are being amortized by that Portfolio on a straight-line
basis over a five-year period. At February 28, 1997, the unamortized balance
of such expenses amounted to $12,399, $2,733, $36,364, $13,840, and $25,205,
for Focus, Genesis, Guardian, Manhattan, and Partners, respectively.
8) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by Managers Trust with respect to any two or more
Portfolios are allocated in proportion to the net assets of such Portfolios,
except where a more appropriate allocation of expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
9) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered call
option are recorded in the liability section of each Portfolio's Statement of
Assets and Liabilities and are subsequently adjusted to the current market
value. When an option is exercised, closed, or expired, the Portfolio
realizes a gain or loss and the liability is eliminated. A Portfolio bears
the risk of a decline in the price of the security during the period,
although any potential loss during the period would be reduced by the amount
of the option premium received. In general, written covered call options may
serve as a partial hedge against decreases in value in the underlying
securities to the extent of the premium received. All securities covering
outstanding options are held in escrow by the custodian bank.
Summary of option transactions for the six months ended February 28, 1997:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
- ------------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
CONTRACTS WRITTEN 4,100 1,346,615
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (1,000) (313,679)
CONTRACTS CLOSED (2,500) (907,240)
-----------------------
CONTRACTS OUTSTANDING 2/28/97 600 $ 125,696
-----------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
WHEN
GUARDIAN NUMBER WRITTEN
- -------------------------------------------------------------------------
<S> <C> <C>
CONTRACTS OUTSTANDING 8/31/96 0 $ 0
CONTRACTS WRITTEN 15,000 4,499,828
CONTRACTS EXPIRED 0 0
CONTRACTS EXERCISED (5,000) (1,568,397)
CONTRACTS CLOSED (5,000) (1,783,970)
------------------------
CONTRACTS OUTSTANDING 2/28/97 5,000 $ 1,147,461
------------------------
</TABLE>
59
<PAGE>
10) SECURITY LENDING: Portfolio securities loans involve certain risks in the
event a borrower should fail financially, including delays or inability to
recover the lent securities or foreclose against the collateral. The
investment manager, under the general supervision of Managers Trust's Board
of Trustees, monitors the creditworthiness of the parties to whom the
Portfolios make security loans. The Portfolios will not lend securities on
which covered call options have been written, or lend securities on terms
which would prevent each of their investors from qualifying as a regulated
investment company. Portfolio securities loans to Neuberger&Berman, LLC
("Neuberger"), the Portfolios' principal broker and sub-adviser, are made in
accordance with an exemptive order issued by the Securities and Exchange
Commission under the 1940 Act. The Portfolios receive cash as collateral
against the lent securities, which must be maintained at not less than 100%
of the market value of the lent securities during the period of the loan.
The Portfolios receive income earned on the lent securities and a portion of
the income earned on the cash collateral. During the six months ended
February 28, 1997, Focus, Guardian, Manhattan, and Partners lent securities
to Neuberger. At February 28, 1997, cash collateral received by Focus,
Guardian, Manhattan, and Partners was equal to or in excess of 100% of the
market value of the loaned securities.
11) REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that each Portfolio's investment manager has determined
are creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis) 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 has contracted to 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 has
60
<PAGE>
voluntarily agreed to waive a portion of the management fee borne directly by
Genesis and indirectly by Neuberger&Berman Genesis Trust to reduce the annual
fee by 0.10% per annum of average daily net assets of Genesis, effective May 1,
1995.
All of the capital stock of Management is owned by individuals who are also
principals of Neuberger, a member firm of The New York Stock Exchange and sub-
adviser to each Portfolio. Neuberger is retained by Management to furnish it
with investment recommendations and research information without added cost to
each Portfolio. Several individuals who are officers and/or trustees of Managers
Trust are also principals of Neuberger and/or officers and/or directors of
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 $939, $4,158,
$1,595, and $895 for Focus, Genesis, Guardian, and Partners, respectively, which
is less than .01% of each Portfolio's average daily net assets.
NOTE C -- SECURITIES TRANSACTIONS:
During the six months ended February 28, 1997, there were purchase and sale
transactions (excluding short-term securities and option contracts written) as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ------------------------------------------------------------------------------------
<S> <C> <C>
FOCUS $ 530,416,045 $ 518,273,318
GENESIS 237,149,179 35,908,529
GUARDIAN 1,616,370,266 1,397,631,626
MANHATTAN 126,828,594 227,455,028
PARTNERS 1,006,818,489 742,840,515
</TABLE>
During the six months ended February 28, 1997, there were brokerage
commissions on securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
OTHER
NEUBERGER BROKERS TOTAL
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOCUS $ 643,449 $ 552,787 $ 1,196,236
GENESIS 216,560 129,043 345,603
GUARDIAN 2,261,803 1,712,015 3,973,818
MANHATTAN 274,937 119,821 394,758
PARTNERS 1,782,038 612,466 2,394,504
</TABLE>
In addition, Neuberger's share of the total interest income earned for the
six months ended February 28, 1997 from the collateralization of securities
loaned to or through Neuberger was $242,525, $1,338,584, $336,304, and $214,684,
for Focus, Guardian, Manhattan, and Partners, respectively.
NOTE D -- LINE OF CREDIT:
Genesis has an unsecured $20,000,000 bank line of credit with State Street
Bank and Trust Company to be used only as a temporary measure for extraordinary
or emergency purposes. Borrowings under this agreement bear interest at the
overnight
61
<PAGE>
Federal Funds Rate plus .75% per annum. For this line of credit, Genesis has
been assessed a facility fee of .1% annually of the available line of credit
paid quarterly in arrears. No compensating balances are required. There were no
loans outstanding pursuant to this line of credit at February 28, 1997, nor has
Genesis utilized this line of credit at anytime to date.
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
FOCUS
<TABLE>
<CAPTION>
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1996 ADDITIONS REDUCTIONS 1997 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DT Industries 0 640,000 0 640,000 $18,880,000
</TABLE>
GUARDIAN
<TABLE>
<CAPTION>
BALANCE OF GROSS BALANCE OF
SHARES HELD PURCHASES GROSS SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28,
NAME OF ISSUER: 1996 ADDITIONS REDUCTIONS 1997 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADVANTA Corp. Class B 857,000 2,543,000 0 3,400,000 $136,425,000
Coltec Industries 4,778,900 73,500 0 4,852,400 88,556,300
Fingerhut Cos.** 3,241,700 0 1,335,200 1,906,500 27,882,563
Foundation Health 3,020,000 1,560,000 0 4,580,000 172,895,000
Healthsource Inc. 4,190,000 0 4,190,000 0 0
Hospitality Properties
Trust** 1,442,600 0 1,012,200 430,400 13,934,200
J & L Specialty Steel 3,278,200 10,000 3,288,200 0 0
USFreightways Corp.** 1,257,000 0 0 1,257,000 30,325,125
UCAR International 0 2,671,900 0 2,671,900 114,891,700
Zeigler Coal Holding 1,702,000 0 0 1,702,000 43,188,250
</TABLE>
*AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
**AT FEBRUARY 28, 1997, THESE SECURITIES WERE NO LONGER AFFILIATED ISSUERS.
NOTE F -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent accountants/auditors.
Annual reports contain audited financial statements.
62
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
FOCUS GENESIS
PORTFOLIO PORTFOLIO
Period
from
Six August Six
Months 2, Months
Ended 1993(1) Ended Year
February to February Ended
28, August 28, August
1997 Year Ended August 31, 31, 1997 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .53%(2) .54% .57% .58% .58%(2) .80%(2)(3) .85%(3)
-------------------------------------------------------------------------------
Net Investment Income .57%(2) 1.04% 1.05% 1.16% 1.46%(2) .27%(2)(3) .27%(3)
-------------------------------------------------------------------------------
Portfolio Turnover Rate 42% 39% 36% 52% 4% 10% 21%
-------------------------------------------------------------------------------
Average Commission Rate Paid $0.0569 $0.0578 -- -- -- $0.0577 $0.0576
-------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,339.3 $1,122.4 $969.2 $645.0 $574.0 $510.9 $259.9
-------------------------------------------------------------------------------
<CAPTION>
Period
from
August
2,
1993(1)
to
August
31,
1995 1994 1993
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .94%(3) .98% 1.07%(2)
Net Investment Income .25%(3) .18% .37%(2)
Portfolio Turnover Rate 37% 63% 3%
Average Commission Rate Paid -- -- --
Net Assets, End of Period (in millions) $142.2 $138.6 $118.6
</TABLE>
1) The date investment operations commenced.
2) Annualized.
3) Had Management not waived a portion of the management fee, the annualized
ratios to average daily net assets would have been:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, August 31,
GENESIS 1997 1996 1995
- -------------------------------------------------------------
<S> <C> <C> <C>
Expenses .90% .95% .97%
Net Investment Income .17% .17% .22%
</TABLE>
63
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
GUARDIAN MANHATTAN
PORTFOLIO PORTFOLIO
Period
from
Six August Six
Months 2, Months
Ended 1993(1) Ended Year
February to February Ended
28, August 28, August
1997 Year Ended August 31, 31, 1997 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .46%(2) .46% .48% .50% .51%(2) .59%(2) .58%
-------------------------------------------------------------------------------
Net Investment Income .91%(2) 1.72% 1.72% 1.66% 2.45%(2) .02%(2) .13%
-------------------------------------------------------------------------------
Portfolio Turnover Rate 20% 37% 26% 24% 3% 22% 53%
-------------------------------------------------------------------------------
Average Commission Rate Paid $0.0538 $0.0580 -- -- -- $0.0587 $0.0373
-------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $7,546.9 $6,232.5 $4,613.2 $2,480.3 $1,777.6 $581.1 $567.4
-------------------------------------------------------------------------------
<CAPTION>
Period
from
August
2,
1993(1)
to
August
31,
1995 1994 1993
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .59% .59% .59%(2)
Net Investment Income .42% .53% .55%(2)
Portfolio Turnover Rate 44% 50% 3%
Average Commission Rate Paid -- -- --
Net Assets, End of Period (in millions) $645.4 $521.7 $536.8
</TABLE>
1) The date investment operations commenced.
2) Annualized.
64
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Equity Managers Trust
<TABLE>
<CAPTION>
PARTNERS
PORTFOLIO
Period
from
Six August
Months 2,
Ended 1993(1)
February to
28, August
1997 Year Ended August 31, 31,
(UNAUDITED) 1996 1995 1994 1993
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS:
Expenses .49%(2) .51% .53% .54% .54%(2)
------------------------------------------------------------
Net Investment Income .99%(2) 1.26% 1.13% .75% 1.19%(2)
------------------------------------------------------------
Portfolio Turnover Rate 33% 96% 98% 75% 8%
------------------------------------------------------------
Average Commission Rate Paid $0.0480 $0.0494 -- -- --
------------------------------------------------------------
Net Assets, End of Period (in millions) $2,681.4 $1,999.6 $1,623.5 $1,340.3 $1,182.1
------------------------------------------------------------
</TABLE>
1) The date investment operations commenced.
2) Annualized.
65
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger&Berman Management Incorporated
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800-877-9700
Institutional Services 800-366-6264
SUB-ADVISER
Neuberger&Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger&Berman Funds
Institutional Services
605 Third Avenue 2nd Floor
New York, NY 10158-0180
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
Neuberger&Berman Management Inc., Neuberger&Berman Focus Trust, Neuberger&Berman
Genesis Trust, Neuberger&Berman Guardian Trust, Neuberger&Berman Manhattan
Trust, and Neuberger&Berman Partners Trust are registered service marks of
Neuberger&Berman Management Inc.
- -C- 1997 Neuberger&Berman Management Inc.
66
<PAGE>
OFFICER AND TRUSTEES
Stanley Egener
CHAIRMAN OF THE BOARD AND TRUSTEE
Lawrence Zicklin
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Donald M. Cox
TRUSTEE
Alan R. Gruber
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Gustave H. Shubert
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
67
<PAGE>
NEUBERGER&BERMAN MANAGEMENT INC.-Registered Trademark-
605 THIRD AVENUE 2ND FLOOR
NEW YORK, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
Statistics and projections in this report are derived from sources deemed to be
reliable but cannot be regarded as a representation of future results of the
Funds. This report is prepared for the general information of shareholders and
is not an offer of shares of the Funds. Shares are sold only through the
currently effective prospectus, which must precede or accompany this report.
[LOGO] PRINTED ON RECYCLED PAPER
NBESAR030297
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</SEC-DOCUMENT>
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