-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UT8LmUsyDFmOk9H0pHeDnA1AQcuRRBMI+kNZljL41G+zAVBwO28ukFAQcmgYn2OE m/oE3bl3LgD8VkaFSK4lmA== 0000898432-97-000251.txt : 19970429 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 N-30D 1 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 TABLE OF CONTENTS
THE FUNDS 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
3 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 PERFORMANCE HIGHLIGHTS
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 - ------------------------------------------------------------------ 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
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 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 - ---------------------------------------------------------------------- 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 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 - ---------------------------------------------------------------------- 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 - ---------------------------------------------------------------------- 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 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 - ---------------------------------------------------------------------- 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 - ---------------------------------------------------------------------- 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 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 - ---------------------------------------------------------------------- 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 - ---------------------------------------------------------------------- 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 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 - ---------------------------------------------------------------------- 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 (This page has been left blank intentionally.) 19 STATEMENTS OF ASSETS AND LIABILITIES Neuberger&Berman - ---------------------------------------------------------------------- Equity Trust
FOCUS GENESIS (000'S OMITTED EXCEPT PER SHARE AMOUNTS) TRUST TRUST ------------------------------- 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 -------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 20 February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Trust
GUARDIAN MANHATTAN PARTNERS TRUST TRUST TRUST ------------------------------------------------ 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 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 21 STATEMENTS OF OPERATIONS Neuberger&Berman - ---------------------------------------------------------------------- Equity Trust
FOCUS GENESIS (000'S OMITTED) TRUST TRUST --------------------------- 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 ---------------------------
SEE NOTES TO FINANCIAL STATEMENTS 22 For the Six Months Ended February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Trust
GUARDIAN MANHATTAN PARTNERS TRUST TRUST TRUST ------------------------------------------------ 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 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 23 STATEMENTS OF CHANGES IN NET ASSETS Neuberger&Berman - ---------------------------------------------------------------------- Equity Trust
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 ------------------------------------------------------------- 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 -------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 24 - ---------------------------------------------------------------------- Equity Trust
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) ----------------------------------------------------------------------------- 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 ----------------------------------------------------------------------------- Year Ended August 31, 1996 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
SEE NOTES TO FINANCIAL STATEMENTS 25 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 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 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 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:
ADDITIONS REDUCTIONS - ------------------------------------------------------------------------------- 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
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 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.
Period from Six August Months 30, Ended 1993(2) February to 28, August 1997 Year Ended August 31, 31, (UNAUDITED) 1996 1995 1994 1993 ------------------------------------------------------- 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) -------------------------------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS 30 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.
Period from Six August Months 26, Ended 1993(2) February to 28, August 1997 Year Ended August 31, 31, (UNAUDITED) 1996 1995 1994 1993 ------------------------------------------------------- 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) -------------------------------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS 31 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.
Period from Six August Months 3, Ended 1993(2) February to 28, August 1997 Year Ended August 31, 31, (UNAUDITED) 1996 1995 1994 1993 --------------------------------------------------------- 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) ---------------------------------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS 32 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.
Period from Six August Months 30, Ended 1993(2) February to 28, August 1997 Year Ended August 31, 31, (UNAUDITED) 1996 1995 1994 1993 ------------------------------------------------------- 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) -------------------------------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS 33 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.
Period from Six August Months 30, Ended 1993(2) February to 28, August 1997 Year Ended August 31, 31, (UNAUDITED) 1996 1995 1994 1993 ------------------------------------------------------- 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) -------------------------------------------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS 34 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:
Period from August Six 30, Months 1993 Ended to February August 28, Year Ended August 31, 31, FOCUS 1997 1996 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Expenses 1.13% 1.27% 2.50% 2.50% 2.50% --------------------------------------------- Net Investment Income (Loss) .00% .35% (.87%) (.73%) (1.53%) ---------------------------------------------
Period from August 3, 1993 to August Year Ended August 31, 31, GUARDIAN 1996 1995 1994 1993 - ---------------------------------------------------------------------------------- Expenses .92% .96% 1.52% 2.50% --------------------------------- Net Investment Income (Loss) 1.26% 1.29% .78% (.69%) ---------------------------------
Period from August Six 30, Months 1993 Ended to February August 28, Year Ended August 31, 31, MANHATTAN 1997 1996 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Expenses 1.31% 1.25% 1.46% 2.50% 2.50% --------------------------------------------- Net Investment Income (Loss) (.71%) (.55%) (.43%) (1.38%) 4.02% ---------------------------------------------
35
Period from August Six 30, Months 1993 Ended to February August 28, Year Ended August 31, 31, PARTNERS 1997 1996 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Expenses 1.00% 1.06% 1.24% 2.50% 2.50% --------------------------------------------- Net Investment Income (Loss) .48% .72% .49% (1.22%) .99% ---------------------------------------------
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:
Period from August Six 26, Months 1993 Ended to February August 28, Year Ended August 31, 31, GENESIS 1997 1996 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Expenses 1.44% 1.65% 1.78% 2.50% 2.50% --------------------------------------------- Net Investment Loss (.37%) (.54%) (.60%) (1.35%) (1.43%) ---------------------------------------------
6) Annualized. 36 SCHEDULE OF INVESTMENTS Neuberger&Berman February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Focus Portfolio
TOP TEN EQUITY HOLDINGS --------------------------------------------------- HOLDING PERCENTAGE 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%
Market Value(1) Number (000's of Shares omitted) - ---------- ------------ 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 Market Value(1) Number (000's of Shares omitted) - ---------- ------------ 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 ------------
37 SCHEDULE OF INVESTMENTS Neuberger&Berman February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Focus Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ---------- ------------ 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 ------------ Market Value(1) Number (000's of Shares omitted) - ---------- ------------ TRANSPORTATION (1.3%) 629,400 Continental Airlines Class B $ 18,017 ------------ TOTAL COMMON STOCKS (COST $910,278) 1,327,650 ------------ Principal Amount - ---------- 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 ------------
SEE NOTES TO SCHEDULE OF INVESTMENTS 38 SCHEDULE OF INVESTMENTS Neuberger&Berman February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Genesis Portfolio
TOP TEN EQUITY HOLDINGS --------------------------------------------------- HOLDING PERCENTAGE 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%
Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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
39 SCHEDULE OF INVESTMENTS Neuberger&Berman - -------------------------------------------------------------------------------- Genesis Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 ------------- Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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
40 February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Genesis Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 ------------- Principal Amount - ---------- 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 -------------
SEE NOTES TO SCHEDULE OF INVESTMENTS 41 SCHEDULE OF INVESTMENTS Neuberger&Berman - -------------------------------------------------------------------------------- Guardian Portfolio
TOP TEN EQUITY HOLDINGS --------------------------------------------------- HOLDING PERCENTAGE 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%
Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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
42 February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Guardian Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 ------------ Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 ------------
43 SCHEDULE OF INVESTMENTS Neuberger&Berman - -------------------------------------------------------------------------------- Guardian Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 ------------
44 February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Guardian Portfolio (Cont'd)
Market Value(1) Principal (000's Amount omitted) - ----------- ------------ 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 ------------ Market Value(1) Principal (000's Amount omitted) - ----------- ------------ 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 ------------
SEE NOTES TO SCHEDULE OF INVESTMENTS 45 SCHEDULE OF INVESTMENTS Neuberger&Berman - -------------------------------------------------------------------------------- Manhattan Portfolio
TOP TEN EQUITY HOLDINGS --------------------------------------------------- HOLDING PERCENTAGE 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%
Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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
46 February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Manhattan Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 ------------- Market Value(1) Number (000's of Shares omitted) - ---------- ------------- 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 -------------
Principal Amount - ---------- 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 -------------
SEE NOTES TO SCHEDULE OF INVESTMENTS 47 SCHEDULE OF INVESTMENTS Neuberger&Berman - -------------------------------------------------------------------------------- Partners Portfolio
TOP TEN EQUITY HOLDINGS --------------------------------------------------- HOLDING PERCENTAGE 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%
Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 ------------
48 February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Partners Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 ------------ Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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
49 SCHEDULE OF INVESTMENTS Neuberger&Berman February 28, 1997 (Unaudited) - -------------------------------------------------------------------------------- Partners Portfolio (Cont'd)
Market Value(1) Number (000's of Shares omitted) - ----------- ------------ 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 ------------ Market Value(1) Principal (000's Amount omitted) - ----------- ------------ 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 ------------
SEE NOTES TO SCHEDULE OF INVESTMENTS 50 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:
SECURITIES AND MARKET VALUE PREMIUM ON MARKET VALUE NEUBERGER&BERMAN SHARES OPTIONS OF SECURITIES OPTIONS OF OPTIONS - ---------------------------------------------------------------------------------------------------- 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
4) At cost, which approximates market value. 5) At February 28, 1997, selected Portfolio information on a Federal income tax basis was as follows:
GROSS GROSS UNREALIZED UNREALIZED NET UNREALIZED NEUBERGER&BERMAN COST APPRECIATION DEPRECIATION APPRECIATION - ---------------------------------------------------------------------------------------------------- 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
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 STATEMENTS OF ASSETS AND LIABILITIES - ---------------------------------------------------------------------- Equity Managers Trust
FOCUS GENESIS (000'S OMITTED) PORTFOLIO PORTFOLIO ------------------------------- 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 -------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 52 February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Managers Trust
GUARDIAN MANHATTAN PARTNERS PORTFOLIO PORTFOLIO PORTFOLIO ------------------------------------------------ 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 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 53 STATEMENTS OF OPERATIONS - ---------------------------------------------------------------------- Equity Managers Trust
FOCUS GENESIS (000'S OMITTED) PORTFOLIO PORTFOLIO --------------------------- 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 ---------------------------
SEE NOTES TO FINANCIAL STATEMENTS 54 For the Six Months Ended February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Managers Trust
GUARDIAN MANHATTAN PARTNERS PORTFOLIO PORTFOLIO PORTFOLIO ------------------------------------------------ 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 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 55 STATEMENTS OF CHANGES IN NET ASSETS - ---------------------------------------------------------------------- Equity Managers Trust
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 ------------------------------------------------------ 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 ------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 56 - ---------------------------------------------------------------------- Equity Managers Trust
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 ---------------------------------------------------------------------------------- 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 ----------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 57 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 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:
VALUE WHEN FOCUS NUMBER WRITTEN - ------------------------------------------------------------------------ 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 -----------------------
VALUE WHEN GUARDIAN NUMBER WRITTEN - ------------------------------------------------------------------------- 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 ------------------------
59 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 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:
PURCHASES SALES - ------------------------------------------------------------------------------------ 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
During the six months ended February 28, 1997, there were brokerage commissions on securities paid to Neuberger and other brokers as follows:
OTHER NEUBERGER BROKERS TOTAL - -------------------------------------------------------------------------------------------- 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
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 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
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 - ------------------------------------------------------------------------------------------- DT Industries 0 640,000 0 640,000 $18,880,000
GUARDIAN
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 - ------------------------------------------------------------------------------------------- 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
*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 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Equity Managers Trust
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 ------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------- Period from August 2, 1993(1) to August 31, 1995 1994 1993 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
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:
Six Months Ended Year Ended February 28, August 31, GENESIS 1997 1996 1995 - ------------------------------------------------------------- Expenses .90% .95% .97% Net Investment Income .17% .17% .22%
63 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Equity Managers Trust
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 ------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------- Period from August 2, 1993(1) to August 31, 1995 1994 1993 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
1) The date investment operations commenced. 2) Annualized. 64 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Equity Managers Trust
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 ------------------------------------------------------------ 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 ------------------------------------------------------------
1) The date investment operations commenced. 2) Annualized. 65 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 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 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 (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) -----END PRIVACY-ENHANCED MESSAGE-----