-----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, Cr0T3esnn0CK7GCrcwBXF81VOIRoAqLmyy7YF+pqsWhf3HbQibolOYz5TQrE8z6i BzS2eUuCvlPPhpccyIj4fA== 0000898432-97-000212.txt : 19970328 0000898432-97-000212.hdr.sgml : 19970328 ACCESSION NUMBER: 0000898432-97-000212 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUBERGER & BERMAN EQUITY ASSETS CENTRAL INDEX KEY: 0000914228 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133783592 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08106 FILM NUMBER: 97565290 BUSINESS ADDRESS: STREET 1: 605 THIRD AVENUE 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 ASSETS [SERVICE MARK] Neuberger&Berman FOCUS ASSETS Neuberger&Berman GUARDIAN ASSETS Neuberger&Berman MANHATTAN ASSETS Neuberger&Berman PARTNERS ASSETS TABLE OF CONTENTS THE FUNDS CHAIRMAN'S LETTER 4 PORTFOLIO COMMENTARY Focus Assets 5 Guardian Assets 7 Manhattan Assets 10 Partners Assets 13 PERFORMANCE HIGHLIGHTS 15 FINANCIAL STATEMENTS 16 FINANCIAL HIGHLIGHTS PER SHARE DATA Focus Assets 26 Guardian Assets 27 Manhattan Assets 28 Partners Assets 29 THE PORTFOLIOS SCHEDULE OF INVESTMENTS TOP TEN EQUITY HOLDINGS Focus Portfolio 32 Guardian Portfolio 34 Manhattan Portfolio 38 Partners Portfolio 40 FINANCIAL STATEMENTS 44 FINANCIAL HIGHLIGHTS 55 OTHER INFORMATION Directory/Officers and Trustees 57 3 CHAIRMAN'S LETTER March 27, 1997 Dear Fellow Shareholder: During the six months ended February 28, 1997, we witnessed one of the most explosive rallies in stock market history with the Dow Jones Industrial Average and Standard & Poor's 500 Index gaining 23.82% and 22.60%, respectively. High multiple blue chip stocks (particularly branded consumer goods companies), continued to lead the market parade. Not left out of the rally were technology, financial services, and health care stocks, which rebounded as well, helping our funds achieve solid gains. With the Dow and S&P "500" near record levels and equity valuations well above historic norms, we are comforted by our conviction that our portfolios are comprised of high quality companies trading at reasonable fundamental valuations relative to the market and their long term growth prospects. We have a talented and experienced group of analysts and portfolio managers who, in keeping with our firm's heritage, focus primarily on value. If the economy continues to provide low inflation, relatively low interest rates and reasonable corporate earnings, stocks can continue to progress. We believe well managed, financially sound companies in out-of-favor industries will participate more fully in a market advance. We have faith investors will ultimately see the folly in chasing a relative handful of blue-chip growth stocks simply because they are going up in price. Sooner or later, money will gravitate to equally high-quality companies selling at much more reasonable fundamental valuations. Whatever the market holds in store for us over the next six months and beyond, we will continue to do what we have always done -- focus on quality and value -- the two most important ingredients in the recipe for long term investment success. Sincerely, /s/ Stanley Egener Stanley Egener Chairman of the Board Neuberger&Berman Equity Assets 4 PORTFOLIO COMMENTARY Neuberger&Berman - ---------------------------------------------------------------------- Focus Assets PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN EMPLOY A SECTOR-SPECIFIC APPROACH TO MANAGING THE PORTFOLIO. FIRST, THEY IDENTIFY SIX ECONOMIC SECTORS (OUT OF A POSSIBLE 13) THEY BELIEVE TO BE MOST UNDERVALUED. THEY THEN FOCUS ON WELL MANAGED, FINANCIALLY SOUND INDUSTRY LEADERS IN EACH CHOSEN ECONOMIC SECTOR. THE PORTFOLIO MANAGEMENT TEAM FAVORS COMPANIES WITH ABOVE MARKET AVERAGE EARNINGS GROWTH POTENTIAL TRADING AT BELOW MARKET AVERAGE PRICE/ EARNINGS MULTIPLES. For the six months ended February 28, 1997, the fund returned 21.63% in line with the Standard & Poor's 500 Index's 22.60% gain (see page 15 for the average annual total returns, as of February 28, 1997). Over the last six months, our substantial commitment to financial stocks (37.6% of the portfolio at the close of the first half of fiscal 1997) was particularly productive, with bank, insurance, credit and finance company holdings returning 39% on average. Technology investments, subdivided into electronics companies and computer and office equipment companies (13.8% of the portfolio at the close of the first half of fiscal 1997) gained 28% and 37%, respectively. Media and entertainment were among our worst performing groups, with our holdings down 6.2% over the period. Despite the group's stellar performance, we believe selected financial stocks remain fundamentally undervalued. Travelers Group and Capital One Financial, for example, still trade at well below market average price/earnings multiples. Why are these stocks still cheap? Conventional wisdom seems to be that rising interest rates will hurt earnings. We believe that concern has been overblown and that top quality financial companies can continue to increase earnings even if interest rates trend modestly higher. The managements of many financial companies seem to agree that their stocks are still under-valued, as is evidenced by ongoing share repurchase activity. We continue to favor selected technology companies like Compaq Computer and Seagate Technology. Compaq's product line is selling well, manufacturing costs are lower, and its product mix is more profitable. In our view, Seagate is well positioned in the highest growth segment of the computer disk drive market. Prices have firmed, costs 5 - ---------------------------------------------------------------------- Focus Assets (Cont'd) have been reduced and sales volume has risen. Disciplined value investors like ourselves periodically get the opportunity to buy high-quality technology companies at below market average multiples. When we do, we add these securities to our portfolio. Value investing demands patience. For example, take Exide Corp., the world's largest manufacturer of automotive, marine and specialty batteries. Exide is focused on improving profitability in Europe where it is one of the market leaders. Weather patterns can cause sharp swings in the demand for batteries. Severely cold weather provokes high levels of battery failures, while unusually mild winters or cool summers depress demand. Exide's sales and earnings have been weak in recent periods, due to mild weather conditions in Europe and restructuring charges. However, we are encouraged by the improved gross margins seen in the first nine months of fiscal year 1997 (started March 1996), and we will carefully monitor whether this trend continues in the future. In the first half of fiscal 1997, our value discipline once again rewarded shareholders. We remain committed to the investment strategy -- buying great companies when they are opportunistically priced -- that has been responsible for the fund's superior long-term performance record. The composition, industries and holdings of the portfolio are subject to change. Focus Assets' portfolio is invested in a wide array of stocks, and no single holding makes up more than a small fraction of the portfolio's total assets. While the value-oriented approach is intended to limit risks, the portfolio -- with its concentration in sectors -- may be more greatly affected by any single economic, political or regulatory development than a more diversified mutual fund. Please remember that past performance is not indicative of future results. 6 PORTFOLIO COMMENTARY Neuberger&Berman - ---------------------------------------------------------------------- Guardian Assets PORTFOLIO CO-MANAGERS KENT SIMONS AND KEVIN RISEN FOCUS ON "FIRST RATE" COMPANIES IN INDUSTRIES THAT ARE CURRENTLY OUT-OF-FAVOR. RECOGNIZING THAT "CHEAP" STOCKS ARE NOT NECESSARILY UNDERVALUED, THEY SEEK WELL MANAGED, FINANCIALLY SOUND COMPANIES TRADING AT FUNDAMENTALLY ATTRACTIVE PRICE/EARNINGS MULTIPLES RELATIVE TO THE MARKET AND THEIR LONG-TERM EARNINGS GROWTH POTENTIAL. BY CONCENTRATING THE PORTFOLIO IN WHAT THEY BELIEVE ARE HIGH-QUALITY WALL STREET "ORPHANS," THE PORTFOLIO MANAGEMENT TEAM ATTEMPTS TO TAKE CONSISTENT ADVANTAGE OF OPPORTUNITIES CREATED BY INVESTORS' OVERREACTION TO REAL OR PERCEIVED PROBLEMS. For the six months ended February 28, 1997, the fund advanced 19.90% versus the Standard & Poor's 500 Index's 22.60% return (see page 15 for the average annual total returns, as of February 28, 1997). Over this six-month period, the portfolio's concentration in banking, insurance, credit and finance stocks, including real estate investment trusts, (collectively, 31.5% at the close of the first half of fiscal 1997) generated average returns of approximately 37.0%. Technology investments (our second largest group weighting at 16.8%) also contributed to performance with electronics company holdings gaining 48.9% and computer and office equipment stocks returning 31.6%. Our automotive and auto parts holdings modestly under-performed the market. Returns from our health care investments were mixed. As is evidenced by their heavy weighting in the portfolio, we continue to like selected financial stocks. Wall Street seems to believe rising interest rates will disrupt financial companies' earnings progress. That may not be the case. We think financial stocks like CITICORP, Travelers Group, Fannie Mae, and Merrill Lynch, to name just a few of our holdings, have the capacity to grow earnings at an above market average pace, even if interest rates move modestly higher. The stocks still trade at well below market average multiples. That is our definition of value. One doesn't generally associate technology stocks with value investing. However, the technology group's volatility actually lends itself to our discipline of buying first rate companies at discounted multiples. In mid-summer 1996, tech stocks got hit hard. The market's overreaction 7 - ---------------------------------------------------------------------- Guardian Assets (Cont'd) to some modest earnings disappointments gave us the opportunity to buy some seemingly great companies quite cheaply. Seagate Technology, an example of this, was one of our best performing stocks over the past six months. In our view, Seagate is well positioned in the highest growth segment of the computer disk drive market. Prices have firmed, costs have been reduced and sales volume has risen. We had the opportunity to purchase shares at what we viewed as bargain prices. We continually monitor the valuations of all the industry groups and individual stocks in our research universe. When technology stocks are out of favor, we consider adding them to the portfolio. The media and entertainment and energy groups (collectively, about 8.6% of our portfolio) under-performed over the reporting period. Most of our media and entertainment holdings reported relatively good free cash flow growth -- the best barometer of progress in these businesses -- but it was largely overlooked by investors fixated on net earnings growth. In addition, we think investors have overreacted to energy prices retreating from their 1996 highs. Going forward, we believe energy prices will stabilize around current levels, and energy company earnings could then trend higher. Fertilizer company IMC Global and specialty chemical producer Cabot Corp. were among our poorer performing stocks over the last six months as both recorded major earnings disappointments. A weather-induced late start to the planting season hurt IMC's sales and earnings. However, in our judgment, low worldwide grain inventories may indicate better times ahead for the fertilizer industry. Cabot was burdened by weak demand for its core carbon black product and high expenses associated with new specialty chemical product development. Short-term earnings may continue to disappoint. In the longer term, however, the company's recently expanded share repurchase program will leverage returns. With the sale of its property-casualty unit and its acquisition of U.S. Healthcare, we believe Aetna (currently our fourth largest holding) has transformed itself from a relatively slow-growth insurance company to a 8 - ---------------------------------------------------------------------- Guardian Assets (Cont'd) dominant player in the faster-growing managed health care business. Aetna's goal is now to extend U.S. Healthcare's base from small companies to large corporate customers. The stock has done well, but still trades at a multiple discount to the market. In the first half of fiscal 1997, value stocks performed much better than a year ago. However, the market is still favoring high multiple blue-chip growth companies. We don't know how long this will last or when the speculative excesses will be wrung out of the market. We are confident that our portfolio is comprised of quality companies trading at very reasonable fundamental valuations. The composition, industries and holdings of the portfolio are subject to change. Guardian Assets' portfolio is invested in a wide array of stocks, and no single holding makes up more than a small fraction of the portfolio's total assets. Please remember that past performance is not indicative of future results. 9 PORTFOLIO COMMENTARY Neuberger&Berman - ---------------------------------------------------------------------- Manhattan Assets PORTFOLIO MANAGER MARK GOLDSTEIN EMPLOYS A "GROWTH AT A REASONABLE PRICE" (GARP) APPROACH TO THE EQUITIES MARKET. HE SEEKS WELL-MANAGED COMPANIES WITH STRONG BALANCE SHEETS, CONSISTENT EARNINGS GROWTH RECORDS, ABOVE-AVERAGE RETURNS ON EQUITY, HIGH FREE CASH FLOW, AND MOST IMPORTANTLY, REASONABLE FUNDAMENTAL VALUATIONS. BY SHUNNING "HIGH FLYING" WALL STREET FAVORITES, HE ATTEMPTS TO AVOID ONE OF THE MOST COMMON AND COSTLY INVESTMENT ERRORS -- PAYING TOO MUCH FOR GOOD COMPANIES. For the six months ended February 28, 1997, the fund returned 20.17% compared to the Standard & Poor's 500 Index's 22.60% gain (see page 15 for the average annual total returns, as of February 28, 1997). During the first half of fiscal 1997, value re-asserted itself. Our portfolio's over-weighting in the financial services and technology industries paid off handsomely. Returns from our investments in retailers and communications companies were less productive. Our positions in bank stocks like CITICORP and Wells Fargo had a very positive impact on performance, but the real stars of our show were credit card companies like MBNA and Capital One Financial. We took the opportunity to sell some shares of these stocks to take advantage of their price appreciation. We still believe, however, some of these stocks offer a good value. Why are credit card companies so under-loved? Rising consumer debt and credit card delinquency rates have spooked investors. This is a problem, but, in our opinion, not nearly as big a one as most investors perceive. Revenues have been growing rapidly. Despite heated competition, there has been enough pricing flexibility in the industry to maintain attractive profit margins. Capital One Financial and MBNA are still trading at below market average price/earnings multiples. Ironically, even though most credit card companies were originally sold by or spun-off from bank holding companies, strong free cash flows could make some of them attractive acquisition candidates 10 - ---------------------------------------------------------------------- Manhattan Assets (Cont'd) for banks looking to add cash-generating subsidiaries, as is apparently the case in Banc One's pending acquisition of First USA at 20 times earnings. We have had some disappointments. Poor performance from stocks like Nu-Kote Holding, Coventry, and a handful of others was a direct result of unanticipated earnings shortfalls. Other underperformers like cellular telephone giant Airtouch Communications actually posted relatively good results, but sold off due to concern over prospects for future competition from Personal Communications Services (PCS) operators. We think the market is vastly underestimating the value of Airtouch's extensive foreign operations via partnerships with cellular operators in Germany, Italy, Spain and elsewhere. We believe Airtouch's international operations alone are worth two-thirds of its current stock price and the whole company is trading at about half its true value. Recently, we've taken a bite of Lone Star Steakhouse & Saloon, a restaurant chain that has been growing rapidly. We like what's been on the menu, notably 25% profit margins, among the highest in the industry, and about a 40% cash return on investment. Lone Star currently has 205 outlets and plans to expand this number by 20% annually over the next few years. The stock is trading at a price/earnings multiple well below its annual earnings growth rate. We have also bought Merrill Lynch, one of the great names in the financial services industry. In our view, Merrill already has what the Morgan Stanley/Dean Witter combination is hoping to create -- a dominant global franchise in the brokerage and asset management businesses. The demographics are in Merrill's favor with the baby boomers in the early stages of their prime earnings/savings/investment years. Over 50% of Merrill's compensation expense, always the largest cost component in this business, is incentive oriented. We believe this is simply a terrific organization in a historically good long-term growth industry, yet it trades at a significant multiple discount to the market. 11 - ---------------------------------------------------------------------- Manhattan Assets (Cont'd) We are pleased with the fund's performance over the last six months, particularly in view of the fact that it was achieved without stretching our guiding philosophy of growth at a reasonable price. We believe by sticking to our fundamental discipline, we can continue to deliver favorable risk adjusted returns. The composition, industries and holdings of the portfolio are subject to change. Manhattan Assets' portfolio is invested in a wide array of stocks, and no single holding makes up more than a small fraction of the portfolio's total assets. Please remember that past performance is not indicative of future results. 12 PORTFOLIO COMMENTARY Neuberger&Berman - ---------------------------------------------------------------------- Partners Assets PORTFOLIO CO-MANAGERS MICHAEL KASSEN AND ROBERT GENDELMAN FOCUS ON OUT-OF-FAVOR LARGE-CAP STOCKS AND MID-SIZED COMPANIES LESS WIDELY FOLLOWED BY WALL STREET ANALYSTS. THEY ARE PARTICULARLY PARTIAL TO "FALLEN ANGELS" -- STOCKS OF GROWING COMPANIES THAT HAVE EXPERIENCED TEMPORARY SETBACKS, BUT WHOSE LONGER-TERM FUNDAMENTAL OUTLOOK REMAINS STRONG. THE PORTFOLIO MANAGEMENT TEAM VIEWS STOCKS AS PIECES OF BUSINESSES THEY WOULD LIKE TO OWN, RATHER THAN PIECES OF PAPER TO TRADE BASED ON SHORT-TERM PRICE FLUCTUATIONS. THEIR GOAL IS TO FIND QUALITY COMPANIES TRADING AT A DISCOUNT TO THEIR INTRINSIC ECONOMIC VALUE. For the six months ended February 28, 1997, the fund returned 23.14% compared to the Standard & Poor's 500 Index's 22.60% gain (see page 15 for the average annual total returns, as of February 28, 1997). We build the portfolio from the ground up, stock by stock, but generally end up over-weighting several industry groups that we believe offer attractive fundamental values. Over the last six months, our focus on the banking, insurance, and technology industries has helped us achieve strong absolute and relative returns. We have been penalized by our limited exposure to drug stocks, a group we like, but one in which we couldn't find many true fundamental bargains. Going forward, we continue to favor selected bank stocks. Wells Fargo is a good example. Management has extended the franchise through what, in our opinion, are economically sensible strategic acquisitions. They have found creative low cost methods, including the Internet, to attract new customers. The company has moved to penetrate the small business market in a very targeted fashion. Free cash flow has grown, and management has been using this cash to buy back stock. Despite the stock's excellent performance, Wells Fargo still trades at a significant discount to our appraisal of its economic value. We also would like to highlight Capital One Financial. Capital One is one of the largest issuers of Visa and Mastercard credit cards. Despite its solid earnings performance and a history of consistently high return 13 - ---------------------------------------------------------------------- Partners Assets (Cont'd) on equity, we believe Capital One still trades below the market average price/earnings multiple. Credit cards have continued to gain share as a percentage of personal consumption expenditures, leading to what we perceive as favorable industry growth trends. Furthermore, the company's conservative credit line policy, which includes low average credit lines and balances, should keep charge-offs below industry averages. On the other side of the ledger, our investments in deep cyclical industries, such as steel and non-ferrous metals underperfomed the rest of the portfolio. The industries were hurt as investors anticipated a slowing economy. In order to buy quality companies at bargain prices, value managers like ourselves often have to buy during periods of real or perceived crisis. Our goal is to analyze a company's problems to see if there is light at the end of the tunnel. For instance, we recently bought McDonald's. McDonald's stock has been under a lot of pressure due to slower growth in its domestic restaurant business. However, internationally McDonald's has boomed. It is one of the most recognized brand names in the world and international expansion has been the real growth engine for the company -- a factor apparently overlooked by the market. The fund's strong performance in the first half of fiscal 1997 reaffirms our faith in the value discipline. We are confident that buying great companies when they are cheap will continue to reward our shareholders. The composition, industries and holdings of the portfolio are subject to change. Partners Assets' portfolio is invested in a wide array of stocks, and no single holding makes up more than a small fraction of the portfolio's total assets. Please remember that past performance is not indicative of future results. 14 PERFORMANCE HIGHLIGHTS
FOR PERIODS ENDED 2/28/97 ---------------------------------- SIX MONTH PERIOD AVERAGE ANNUAL TOTAL NEUBERGER&BERMAN ENDED RETURNS(1) EQUITY ASSETS 2/28/97 1 YR 5 YR 10 YR - ----------------------------------------------------------------------- FOCUS ASSETS(2) +21.63% +20.82% +18.18% +14.05% GUARDIAN ASSETS +19.90% +20.51% +16.87% +14.04% MANHATTAN ASSETS +20.17% +12.72% +14.08% +11.52% PARTNERS ASSETS +23.14% +25.36% +17.66% +13.70% S&P "500"(3) +22.60% +26.19% +16.95% +14.15%
Each Fund commenced operations in the summer of 1996. The Funds have identical investment objectives and policies and invest in the same Portfolio as other funds ("Sister Funds") of similar names, which are also administered by Neuberger&Berman Management Inc.-Registered Trademark- The performance information for the Funds prior to their commencement of operations is for the Sister Funds. Neuberger&Berman Management Inc. voluntarily bears certain operating expenses of each Fund and their pro rata share of their Portfolio's operating expenses which, in the aggregate, exceed 1.50% per annum of each Fund's average daily net assets, until December 31, 1997. Absent such arrangements, the average annual total returns of the Funds would have been less. The total returns for periods prior to the Funds' commencement of operations would have been lower had they reflected the higher expense ratios of the Funds as compared to those of the Sister Funds. 1) One-year and average annual total returns are for periods ended February 28, 1997. Includes reinvestment of all dividends and capital gain distributions. Results represent past performance and do not guarantee future results. Investment returns and principal may fluctuate and shares when redeemed may be worth more or less than original cost. 2) Prior to November 1, 1991, the investment policies of its Sister Fund required that it invest a substantial portion of its assets in the energy field. 3) The S&P "500" Index is an unmanaged index generally considered to be representative of stock market activity. Please note that indices do not take into account any fees and expenses of investing in the individual securities that they track, and that individuals cannot invest directly in any index. Data about the performance of this index are prepared or obtained by Neuberger&Berman Management Inc. and include reinvestment of all dividends and capital gain distributions. The Portfolios invest in many securities not included in the above-described index. 15 STATEMENTS OF ASSETS AND LIABILITIES Neuberger&Berman - ---------------------------------------------------------------------- Equity Assets
FOCUS ASSETS -------------- ASSETS Investment in corresponding Portfolio, at value (Note A) $ 121,906 Deferred organization costs (Note A) 53,536 Receivable for Trust shares sold -- Receivable from administrator -- net (Note B) 56,788 -------------- 232,230 -------------- LIABILITIES Payable for Fund expenses (Note B) 30,063 Accrued organization costs (Note A) 59,318 Accrued expenses 21,031 -------------- 110,412 -------------- NET ASSETS at value $ 121,818 -------------- NET ASSETS consist of: Par value $ 10 Paid-in capital in excess of par value 100,000 Accumulated undistributed net investment loss (297) Accumulated net realized gains (losses) on investment 2,784 Net unrealized appreciation in value of investment 19,321 -------------- NET ASSETS at value $ 121,818 -------------- SHARES OUTSTANDING ($.001 par value; unlimited shares authorized) 10,001 -------------- NET ASSET VALUE, offering and redemption price per share $12.18 --------------
SEE NOTES TO FINANCIAL STATEMENTS 16 February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Assets
GUARDIAN MANHATTAN PARTNERS ASSETS ASSETS ASSETS ------------------------------------------------ ASSETS Investment in corresponding Portfolio, at value (Note A) $ 1,675,258 $ 120,945 $ 610,685 Deferred organization costs (Note A) 53,537 52,956 52,262 Receivable for Trust shares sold 3,468 -- 1,836 Receivable from administrator -- net (Note B) 56,957 56,556 74,685 ------------------------------------------------ 1,789,220 230,457 739,468 ------------------------------------------------ LIABILITIES Payable for Fund expenses (Note B) 32,458 29,541 37,629 Accrued organization costs (Note A) 59,319 58,325 58,474 Accrued expenses 20,687 21,695 31,292 ------------------------------------------------ 112,464 109,561 127,395 ------------------------------------------------ NET ASSETS at value $ 1,676,756 $ 120,896 $ 612,073 ------------------------------------------------ NET ASSETS consist of: Par value $ 140 $ 10 $ 50 Paid-in capital in excess of par value 1,603,922 101,100 584,605 Accumulated undistributed net investment loss (714) (480) (100) Accumulated net realized gains (losses) on investment (1,605) 5,319 4,679 Net unrealized appreciation in value of investment 75,013 14,947 22,839 ------------------------------------------------ NET ASSETS at value $ 1,676,756 $ 120,896 $ 612,073 ------------------------------------------------ SHARES OUTSTANDING ($.001 par value; unlimited shares authorized) 139,745 10,100 50,400 ------------------------------------------------ NET ASSET VALUE, offering and redemption price per share $12.00 $11.97 $12.14 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 17 STATEMENTS OF OPERATIONS Neuberger&Berman - ---------------------------------------------------------------------- Equity Assets
FOCUS ASSETS For the Period from September 4, 1996 (Commencement of Operations) to February 28, 1997 (UNAUDITED) ------------ INVESTMENT INCOME Investment income from corresponding Portfolio (Note A) $ 617 ------------ Expenses: Administration fee (Note B) 220 Amortization of deferred organization and initial offering expenses (Note A) 5,782 Auditing fees 2,479 Custodian fees 4,950 Distribution fees (Note B) -- Legal fees 5,236 Registration and filing fees 26,162 Shareholder reports 12,670 Shareholder servicing agent fees 39 Trustees' fees and expenses 1 Miscellaneous 89 Expenses from corresponding Portfolio (Notes A & B) 294 ------------ Total expenses 57,922 Deduct -- expenses reimbursed by administrator (Note B) (57,008) ------------ Total net expenses 914 ------------ Net investment income (loss) (297) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM CORRESPONDING PORTFOLIO (NOTE A) Net realized gain (loss) on investment securities 2,843 Net realized loss on option contracts written (59) Change in net unrealized appreciation of investment securities and option contracts written 19,321 ------------ Net gain on investments from corresponding Portfolio (Note A) 22,105 ------------ Net increase in net assets resulting from operations $ 21,808 ------------
SEE NOTES TO FINANCIAL STATEMENTS 18 - ---------------------------------------------------------------------- Equity Assets
GUARDIAN ASSETS For the MANHATTAN Period from ASSETS September 4, PARTNERS 1996 For the ASSETS (Commencement Period from of September 4, 1996 For the Operations) (Commencement Six Months to of Operations) to Ended February 28, February 28, February 28, 1997 1997 1997 (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------------------------------------ INVESTMENT INCOME Investment income from corresponding Portfolio (Note A) $ 3,465 $ 337 $ 1,511 ------------------------------------------------ Expenses: Administration fee (Note B) 1,036 218 391 Amortization of deferred organization and initial offering expenses (Note A) 5,782 5,369 5,793 Auditing fees 2,439 2,439 3,005 Custodian fees 4,961 4,950 5,021 Distribution fees (Note B) 563 -- 154 Legal fees 5,443 5,861 6,389 Registration and filing fees 27,484 26,144 26,477 Shareholder reports 12,899 12,280 14,800 Shareholder servicing agent fees 291 6 275 Trustees' fees and expenses 46 1 -- Miscellaneous -- -- -- Expenses from corresponding Portfolio (Notes A & B) 1,209 323 486 ------------------------------------------------ Total expenses 62,153 57,591 62,791 Deduct -- expenses reimbursed by administrator (Note B) (58,270) (56,774) (61,324) ------------------------------------------------ Total net expenses 3,883 817 1,467 ------------------------------------------------ Net investment income (loss) (418) (480) 44 ------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM CORRESPONDING PORTFOLIO (NOTE A) Net realized gain (loss) on investment securities (1,521) 6,419 5,418 Net realized loss on option contracts written (84) -- -- Change in net unrealized appreciation of investment securities and option contracts written 75,013 14,947 23,610 ------------------------------------------------ Net gain on investments from corresponding Portfolio (Note A) 73,408 21,366 29,028 ------------------------------------------------ Net increase in net assets resulting from operations $ 72,990 $ 20,886 $ 29,072 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 19 STATEMENTS OF CHANGES IN NET ASSETS Neuberger&Berman - ---------------------------------------------------------------------- Equity Assets
FOCUS GUARDIAN ASSETS ASSETS Period from Period from September 4, September 4, 1996 1996 (Commencement (Commencement of of Operations) Operations) to to February 28, February 28, 1997 1997 (UNAUDITED) (UNAUDITED) ----------------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (297) $ (418) Net realized gain (loss) on investments from corresponding Portfolio (Note A) 2,784 (1,605) Change in net unrealized appreciation of investments from corresponding Portfolio (Note A) 19,321 75,013 ----------------------------- Net increase (decrease) in net assets resulting from operations 21,808 72,990 ----------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- (296) Net realized gain on investments -- -- ----------------------------- Total distributions to shareholders -- (296) ----------------------------- FROM TRUST SHARE TRANSACTIONS: Proceeds from shares sold 100,010 1,607,465 Proceeds from reinvestment of dividends and distributions -- 296 Payments for shares redeemed -- (3,699) ----------------------------- Net increase from Trust share transactions 100,010 1,604,062 ----------------------------- NET INCREASE IN NET ASSETS 121,818 1,676,756 NET ASSETS: Beginning of period -- -- ----------------------------- End of period $ 121,818 $ 1,676,756 ----------------------------- Accumulated undistributed net investment income (loss) at end of period $ (297) $ (714) ----------------------------- NUMBER OF TRUST SHARES: Sold 10,001 140,044 Issued on reinvestment of dividends and distributions -- 26 Redeemed -- (325) ----------------------------- Net increase in shares outstanding 10,001 139,745 -----------------------------
SEE NOTES TO FINANCIAL STATEMENTS 20 - ---------------------------------------------------------------------- Equity Assets
MANHATTAN ASSETS PARTNERS Period from ASSETS September 4, Period from 1996 August 19, (Commencement 1996 of (Commencement Operations) Six Months of to Ended Operations) February 28, February 28, to 1997 1997 August 31, (UNAUDITED) (UNAUDITED) 1996 --------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (480) $ 44 $ 3 Net realized gain (loss) on investments from corresponding Portfolio (Note A) 6,419 5,418 (4) Change in net unrealized appreciation of investments from corresponding Portfolio (Note A) 14,947 23,610 (771) --------------------------------------------- Net increase (decrease) in net assets resulting from operations 20,886 29,072 (772) --------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- (147) -- Net realized gain on investments (1,100) (735) -- --------------------------------------------- Total distributions to shareholders (1,100) (882) -- --------------------------------------------- FROM TRUST SHARE TRANSACTIONS: Proceeds from shares sold 100,010 506,651 104,273 Proceeds from reinvestment of dividends and distributions 1,100 882 -- Payments for shares redeemed -- (27,151) -- --------------------------------------------- Net increase from Trust share transactions 101,110 480,382 104,273 --------------------------------------------- NET INCREASE IN NET ASSETS 120,896 508,572 103,501 NET ASSETS: Beginning of period -- 103,501 -- --------------------------------------------- End of period $ 120,896 $ 612,073 $ 103,501 --------------------------------------------- Accumulated undistributed net investment income (loss) at end of period $ (480) $ (100) $ 3 --------------------------------------------- NUMBER OF TRUST SHARES: Sold 10,001 42,140 10,446 Issued on reinvestment of dividends and distributions 99 76 -- Redeemed -- (2,262) -- --------------------------------------------- Net increase in shares outstanding 10,100 39,954 10,446 ---------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 21 NOTES TO FINANCIAL STATEMENTS Neuberger&Berman February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Assets NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: 1) GENERAL: Neuberger&Berman Focus Assets ("Focus"), Neuberger&Berman Guardian Assets ("Guardian"), Neuberger&Berman Manhattan Assets ("Manhattan"), and Neuberger&Berman Partners Assets ("Partners") (collectively, the "Funds") are separate operating series of Neuberger&Berman Equity Assets (the "Trust"), a Delaware business trust organized pursuant to a Trust Instrument dated October 18, 1993. The Trust had no operations until September 4, 1996, for Focus, Guardian, and Manhattan and until August 19, 1996, for Partners, other than matters relating to its organization and registration as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), and registration of its shares under the Securities Act of 1933, as amended. The trustees of the Trust may establish additional series or classes of shares without the approval of shareholders. The assets of each series belong only to that series, and the liabilities of each series are borne solely by that series and no other. Each Fund seeks to achieve its investment objective by investing all of its net investable assets in its corresponding Portfolio of Equity Managers Trust (each a "Portfolio") having the same investment objective and policies as the Fund. The value of each Fund's investment in its corresponding Portfolio reflects that Fund's proportionate interest in the net assets of that Portfolio (0.01%, 0.02%, 0.02%, and 0.02%, for Focus, Guardian, Manhattan, and Partners, respectively, at February 28, 1997). The performance of each Fund is directly affected by the performance of its corresponding Portfolio. The financial statements of each Portfolio, including the Schedule of Investments, are included elsewhere in this report and should be read in conjunction with the corresponding Fund's financial statements. 2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding Portfolio at value. Investment securities held by each Portfolio are valued by Equity Managers Trust as indicated in the notes following the Portfolios' Schedule of Investments. 3) FEDERAL INCOME TAXES: Each series of the Trust is treated as a separate entity for Federal income tax purposes. It is the policy of Partners to continue to qualify and the intention of Focus, Guardian, and Manhattan to qualify as regulated investment companies by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of investment company taxable income and net capital gains (after reduction for any amounts available for Federal income tax purposes as 22 capital loss carryforwards) sufficient to relieve it from all, or substantially all, Federal income taxes. Accordingly, Partners paid no Federal income taxes and no provision for Federal income taxes was required. 4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of Portfolio expenses, daily on its investment in its corresponding Portfolio. Dividends and distributions from net realized capital gains, if any, are normally distributed in December. Guardian generally distributes substantially all of its net investment income, if any, at the end of each calendar quarter. Income dividends and capital gain distributions to shareholders are recorded on the ex-dividend date. To the extent each Fund's net realized capital gains, if any, can be offset by capital loss carryforwards, it is the policy of each Fund not to distribute such gains. Each Fund distinguishes between dividends on a tax basis and a financial reporting basis and only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital. Differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over-distributions for financial statement purposes are classified as distributions in excess of net investment income or accumulated net realized gains. 5) ORGANIZATION EXPENSES: Expenses incurred by each Fund in connection with its organization are being amortized by that Fund on a straight-line basis over a five-year period. At February 28, 1997, the unamortized balance of such expenses amounted to $53,536, $53,537, $52,956, and $52,262, for Focus, Guardian, Manhattan, and Partners, respectively. The accrued organization costs are payable to Neuberger&Berman Management Incorporated ("Management"), the administrator of each Fund. 6) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses incurred by the Trust with respect to any two or more Funds are allocated in proportion to the net assets of such Funds, except where a more appropriate allocation of expenses to each Fund can otherwise be made fairly. Expenses directly attributable to a Fund are charged to that Fund. 7) OTHER: All net investment income and realized and unrealized capital gains and losses of each Portfolio are allocated pro rata among its respective Funds and any other investors in the Portfolio. NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS WITH AFFILIATES: Each Fund retains Management as its administrator under an Administration Agreement ("Agreement") dated as of February 13, 1996, as amended on August 2, 1996. Pursuant to this Agreement each Fund pays Management an administration fee at the annual rate of .40% of that Fund's average daily net assets. Each Fund indirectly pays for investment management services through its investment in its corresponding Portfolio (see Note B of Notes to Financial Statements of the Portfolios). The 23 Agreement provides that, if with respect to any fiscal year of each Fund, its total operating expenses plus its pro rata portion of its corresponding Portfolio's operating expenses (including the fees payable to Management but excluding interest, taxes, brokerage commissions, and extraordinary expenses) ("Operating Expenses") exceed the most restrictive of the expense limitations imposed by securities laws of the states in which such Fund's shares are qualified for sale, the administration fees for that fiscal year will be reduced by the amount of such excess, provided that Management has no obligation to reimburse the Fund for any such expenses that exceed the administration fee. The most restrictive expense limitation applicable during the period ended February 28, 1997 was 2 1/2% of the first $30 million of average daily net assets, 2% of the next $70 million of average daily net assets, and 1 1/2% of any additional average daily net assets. No reduction in the administration fee as a result of the state expense limitation was required for the period ended February 28, 1997. Currently, there is no state limitation applicable to any Fund. Management acts as agent in arranging for the sale of Fund shares without commission and bears advertising and promotion expenses. The trustees of the Trust have adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). The Plan provides that, as compensation for administrative and other services provided to the Funds, Management's activities and expenses related to the sale and distribution of Fund shares, and ongoing services provided to investors in the Funds, Management receives from each Fund a fee at the annual rate of .25% of that Fund's average daily net assets. Management pays this amount to institutions that distribute Fund shares and provide services to the Funds and their shareholders. Those institutions may use the payments for, among other purposes, compensating employees engaged in sales and/ or shareholder servicing. The amount of fees paid by each Fund during any year may be more or less than the cost of distribution and other services provided to that Fund. NASD rules limit the amount of annual distribution fees that may be paid by a mutual fund and impose a ceiling on the cumulative distribution fees paid. The Trust's Plan complies with those rules. Management has voluntarily undertaken until December 31, 1997, to reimburse each Fund for its Operating Expenses which exceed, in the aggregate, 1.50% per annum of the Fund's average daily net assets. For the period ended February 28, 1997, such excess expenses amounted to $57,008, $58,270, $56,774, and $61,324, for Focus, Guardian, Manhattan, and Partners, respectively. Since inception of the Funds, Management has voluntarily undertaken to pay certain expenses of each Fund as an advance. Those expenses will be repaid by the Funds to Management in the future, and are included under the caption Payable for Fund expenses in the Statement of Assets and Liabilities. All of the capital stock of Management is owned by individuals who are also principals of Neuberger&Berman, LLC ("Neuberger"), a member firm of The New 24 York Stock Exchange and sub-adviser to each Portfolio. Several individuals who are officers and/or trustees of the Trust are also principals of Neuberger and/or officers and/or directors of Management. Each Fund also has a distribution agreement with Management. Management receives no compensation therefor and no commissions for sales or redemptions of shares of beneficial interest of each Fund. Each Portfolio has an expense offset arrangement in connection with its custodian contract. The impact of this arrangement, reflected in the Statement of Operations under the caption Expenses from corresponding Portfolio, was a reduction of $0.08, $0.12, and $0.08 for Focus, Guardian, and Partners, respectively, which is less than .01% of each Fund's average daily net assets. NOTE C -- INVESTMENT TRANSACTIONS: During the period ended February 28, 1997, additions and reductions in each Fund's investment in its corresponding Portfolio were as follows:
ADDITIONS REDUCTIONS - ------------------------------------------------------------------------- FOCUS $ 100,010 $ 533 GUARDIAN 1,614,272 14,678 MANHATTAN 100,010 445 PARTNERS 504,777 27,643
NOTE D -- UNAUDITED FINANCIAL INFORMATION: The financial information included in this interim report is taken from the records of each Fund without audit by independent accountants/auditors. Annual reports contain audited financial statements. 25 FINANCIAL HIGHLIGHTS Neuberger&Berman - -------------------------------------------------------------------------------- Focus Assets The following table includes selected data for a share outstanding throughout the period and other performance information derived from the Financial Statements. The per share amounts and ratios which are shown reflect income and expenses, including the Fund's proportionate share of its corresponding Portfolio's income and expenses. It should be read in conjunction with its corresponding Portfolio's Financial Statements and notes thereto.
Period from September 4, 1996(1) to February 28, 1997 (UNAUDITED) ------- Net Asset Value, Beginning of Period $10.00 ------- Income From Investment Operations Net Investment Income (Loss) (.03) Net Gains or Losses on Securities (both realized and unrealized) 2.21 ------- Total From Investment Operations 2.18 ------- Net Asset Value, End of Period $12.18 ------- Total Return(2)(3) +21.80% ------- Ratios/Supplemental Data Net Assets, End of Period (in thousands) $121.8 ------- Ratio of Expenses to Average Net Assets(4)(5) 1.50% ------- Ratio of Net Investment Income (Loss) to Average Net Assets(4)(5) (.38%) -------
SEE NOTES TO FINANCIAL HIGHLIGHTS 26 FINANCIAL HIGHLIGHTS Neuberger&Berman - -------------------------------------------------------------------------------- Guardian Assets The following table includes selected data for a share outstanding throughout the period and other performance information derived from the Financial Statements. The per share amounts and ratios which are shown reflect income and expenses, including the Fund's proportionate share of its corresponding Portfolio's income and expenses. It should be read in conjunction with its corresponding Portfolio's Financial Statements and notes thereto.
Period from September 4, 1996(1) to February 28, 1997 (UNAUDITED) --------- Net Asset Value, Beginning of Period $ 10.00 --------- Income From Investment Operations Net Investment Income -- Net Gains or Losses on Securities (both realized and unrealized) 2.01 --------- Total From Investment Operations 2.01 --------- Less Distributions Dividends (from net investment income) (.01) --------- Net Asset Value, End of Period $ 12.00 --------- Total Return(2)(3) +20.10% --------- Ratios/Supplemental Data Net Assets, End of Period (in thousands) $1,676.8 --------- Ratio of Expenses to Average Net Assets(4)(5) 1.50% --------- Ratio of Net Investment Income (Loss) to Average Net Assets(4)(5) (.16%) ---------
SEE NOTES TO FINANCIAL HIGHLIGHTS 27 FINANCIAL HIGHLIGHTS Neuberger&Berman - -------------------------------------------------------------------------------- Manhattan Assets The following table includes selected data for a share outstanding throughout the period and other performance information derived from the Financial Statements. The per share amounts and ratios which are shown reflect income and expenses, including the Fund's proportionate share of its corresponding Portfolio's income and expenses. It should be read in conjunction with its corresponding Portfolio's Financial Statements and notes thereto.
Period from September 4, 1996(1) to February 28, 1997 (UNAUDITED) ------- Net Asset Value, Beginning of Period $10.00 ------- Income From Investment Operations Net Investment Income (Loss) (.05) Net Gains or Losses on Securities (both realized and unrealized) 2.13 ------- Total From Investment Operations 2.08 ------- Less Distributions Distributions (from capital gains) (.11) ------- Net Asset Value, End of Period $11.97 ------- Total Return(2)(3) +20.88% ------- Ratios/Supplemental Data Net Assets, End of Period (in thousands) $120.9 ------- Ratio of Expenses to Average Net Assets(4)(5) 1.50% ------- Ratio of Net Investment Income (Loss) to Average Net Assets(4)(5) (.88%) -------
SEE NOTES TO FINANCIAL HIGHLIGHTS 28 FINANCIAL HIGHLIGHTS Neuberger&Berman - -------------------------------------------------------------------------------- Partners Assets The following table includes selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements. The per share amounts and ratios which are shown reflect income and expenses, including the Fund's proportionate share of its corresponding Portfolio's income and expenses. It should be read in conjunction with its corresponding Portfolio's Financial Statements and notes thereto.
Period from Six August Months 19, Ended 1996(1) February to 28, August 1997 31, (UNAUDITED) 1996 ------------------- Net Asset Value, Beginning of Period $ 9.91 $10.00 ------------------- Income From Investment Operations Net Investment Income .01 -- Net Gains or Losses on Securities (both realized and unrealized) 2.28 (.09) ------------------- Total From Investment Operations 2.29 (.09) ------------------- Less Distributions Dividends (from net investment income) (.01) -- Distributions (from capital gains) (.05) -- ------------------- Total Distributions (.06) -- ------------------- Net Asset Value, End of Period $12.14 $ 9.91 ------------------- Total Return(2)(3) +23.14% -0.90% ------------------- Ratios/Supplemental Data Net Assets, End of Period (in thousands) $612.1 $103.5 ------------------- Ratio of Expenses to Average Net Assets(4)(5) 1.50% 1.50% ------------------- Ratio of Net Investment Income to Average Net Assets(4)(5) .05% 2.38% -------------------
SEE NOTES TO FINANCIAL HIGHLIGHTS 29 NOTES TO FINANCIAL HIGHLIGHTS Neuberger&Berman February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Assets 1) The date investment operations commenced. 2) Total return based on per share net asset value reflects the effects of changes in net asset value on the performance of each Fund during each fiscal period and assumes dividends and other distributions, if any, were reinvested. Results represent past performance and do not guarantee future results. Investment returns and principal may fluctuate and shares when redeemed may be worth more or less than original cost. Total return would have been lower if Management had not reimbursed certain expenses. 3) Not annualized. 4) After reimbursement of expenses by Management as described in Note B of Notes to Financial Statements. Had Management not undertaken such action the annualized expense and net investment income ratios to average daily net assets would have been higher and lower, respectively. 5) Annualized. 30 (This page has been left blank intentionally.) 31 SCHEDULE OF INVESTMENTS Neuberger&Berman - -------------------------------------------------------------------------------- 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 ------------
32 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 33 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
34 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 ------------
35 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 ------------
36 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 37 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
38 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 39 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 ------------
40 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
41 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 42 NOTES TO SCHEDULE OF INVESTMENTS February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Managers Trust 1) Investment securities of each Portfolio are valued at the latest sales price; securities for which no sales were reported, unless otherwise noted, are valued at the mean between the closing bid and asked prices. The Portfolios value all other securities by a method that the trustees of Equity Managers Trust believe accurately reflects fair value. Foreign security prices are furnished by independent quotation services expressed in local currency values. Foreign security prices are translated from the local currency into U.S. dollars using current exchange rates. Short-term debt securities with less than 60 days until maturity may be valued at cost which, when combined with interest earned, approximates market value. 2) Affiliated Issuer (see Note D of Notes to Financial Statements). 3) The following securities were held in escrow at February 28, 1997 to cover outstanding call options written:
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 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 43 STATEMENTS OF ASSETS AND LIABILITIES - ---------------------------------------------------------------------- Equity Managers Trust
FOCUS (000'S OMITTED) PORTFOLIO -------------- ASSETS Investments in securities, at market value* (Notes A & D) -- see Schedule of Investments: Unaffiliated issuers $ 1,364,975 Non-controlled affiliated issuers 18,880 -------------- 1,383,855 Cash 3,050 Deferred organization costs (Note A) 12 Dividends and interest receivable 807 Prepaid expenses and other assets 23 Receivable for securities sold 9,893 -------------- 1,397,640 -------------- LIABILITIES Option contracts written, at market value (Note A) 23 Payable for collateral on securities loaned (Note A) 37,879 Payable for securities purchased 19,736 Payable to investment manager (Note B) 518 Accrued expenses 202 -------------- 58,358 -------------- NET ASSETS Applicable to Investors' Beneficial Interests $ 1,339,282 -------------- NET ASSETS consist of: Paid-in capital $ 921,797 Net unrealized appreciation in value of investment securities and option contracts written 417,485 -------------- NET ASSETS $ 1,339,282 -------------- *Cost of investments: Unaffiliated issuers $ 944,686 Non-controlled affiliated issuers 21,787 -------------- Total cost of investments $ 966,473 --------------
SEE NOTES TO FINANCIAL STATEMENTS 44 February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Managers Trust
GUARDIAN MANHATTAN PARTNERS PORTFOLIO PORTFOLIO PORTFOLIO ------------------------------------------------ ASSETS Investments in securities, at market value* (Notes A & D) -- see Schedule of Investments: Unaffiliated issuers $ 7,269,283 $ 600,572 $ 2,722,389 Non-controlled affiliated issuers 555,956 -- -- ------------------------------------------------ 7,825,239 600,572 2,722,389 Cash 42 2,497 1 Deferred organization costs (Note A) 36 14 25 Dividends and interest receivable 5,786 120 1,797 Prepaid expenses and other assets 116 15 51 Receivable for securities sold 32,321 3,065 12,676 ------------------------------------------------ 7,863,540 606,283 2,736,939 ------------------------------------------------ LIABILITIES Option contracts written, at market value (Note A) 1,281 -- -- Payable for collateral on securities loaned (Note A) 200,188 21,345 6,849 Payable for securities purchased 111,780 3,485 47,593 Payable to investment manager (Note B) 2,569 243 945 Accrued expenses 823 106 159 ------------------------------------------------ 316,641 25,179 55,546 ------------------------------------------------ NET ASSETS Applicable to Investors' Beneficial Interests $ 7,546,899 $ 581,104 $ 2,681,393 ------------------------------------------------ NET ASSETS consist of: Paid-in capital $ 5,503,228 $ 452,927 $ 2,133,693 Net unrealized appreciation in value of investment securities and option contracts written 2,043,671 128,177 547,700 ------------------------------------------------ NET ASSETS $ 7,546,899 $ 581,104 $ 2,681,393 ------------------------------------------------ *Cost of investments: Unaffiliated issuers $ 5,289,254 $ 472,395 $ 2,174,689 Non-controlled affiliated issuers 492,181 -- -- ------------------------------------------------ Total cost of investments $ 5,781,435 $ 472,395 $ 2,174,689 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 45 STATEMENTS OF OPERATIONS - ---------------------------------------------------------------------- Equity Managers Trust
FOCUS (000'S OMITTED) PORTFOLIO ------------ INVESTMENT INCOME Income: Dividend income -- unaffiliated issuers $ 6,257 Dividend income -- non-controlled affiliated issuers 12 Interest income 611 Foreign taxes withheld (Note A) (28) ------------ Total income 6,852 ------------ Expenses: Investment management fee (Note B) 3,096 Accounting fees 5 Amortization of deferred organization and initial offering expenses (Note A) 5 Auditing fees 21 Custodian fees (Note B) 148 Insurance expense 12 Legal fees 8 Trustees' fees and expenses 9 ------------ Total expenses 3,304 ------------ Net investment income 3,548 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investment securities sold in unaffiliated issuers 112,150 Net realized loss on investment securities sold in non-controlled affiliated issuers -- Net realized loss on option contracts written (Note A) (643) Change in net unrealized appreciation of investment securities and option contracts written 131,395 ------------ Net gain on investments 242,902 ------------ Net increase in net assets resulting from operations $ 246,450 ------------
SEE NOTES TO FINANCIAL STATEMENTS 46 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 ------------------------------------------------ Total expenses 15,885 1,709 5,704 ------------------------------------------------ Net investment income 31,523 45 11,426 ------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investment securities sold in unaffiliated issuers 278,687 64,034 151,459 Net realized loss on investment securities sold in non-controlled affiliated issuers (48,143) -- -- Net realized loss on option contracts written (Note A) (2,991) -- -- Change in net unrealized appreciation of investment securities and option contracts written 1,018,651 45,541 319,744 ------------------------------------------------ Net gain on investments 1,246,204 109,575 471,203 ------------------------------------------------ Net increase in net assets resulting from operations $ 1,277,727 $ 109,620 $ 482,629 ------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS 47 STATEMENTS OF CHANGES IN NET ASSETS - ---------------------------------------------------------------------- Equity Managers Trust
FOCUS PORTFOLIO Six Months Ended Year February 28, Ended 1997 August 31, (000'S OMITTED) (UNAUDITED) 1996 ----------------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income $ 3,548 $ 11,390 Net realized gain on investments 111,507 51,701 Change in net unrealized appreciation of investments 131,395 (21,728) ----------------------------- Net increase (decrease) in net assets resulting from operations 246,450 41,363 ----------------------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS: Additions 96,472 231,514 Reductions (126,011) (119,679) ----------------------------- Net increase (decrease) in net assets resulting from transactions in investors' beneficial interests (29,539) 111,835 ----------------------------- NET INCREASE (DECREASE) IN NET ASSETS 216,911 153,198 NET ASSETS: Beginning of period 1,122,371 969,173 ----------------------------- End of period $ 1,339,282 $ 1,122,371 -----------------------------
SEE NOTES TO FINANCIAL STATEMENTS 48 - ---------------------------------------------------------------------- Equity Managers Trust
GUARDIAN MANHATTAN PARTNERS PORTFOLIO PORTFOLIO PORTFOLIO Six Months Six Months Six Months Ended Year Ended Year Ended February 28, Ended February 28, Ended February 28, 1997 August 31, 1997 August 31, 1997 (UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) ----------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income $ 31,523 $ 97,934 $ 45 $ 829 $ 11,426 Net realized gain on investments 227,553 307,410 64,034 59,509 151,459 Change in net unrealized appreciation of investments 1,018,651 (111,192) 45,541 (74,167) 319,744 ----------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 1,277,727 294,152 109,620 (13,829) 482,629 ----------------------------------------------------------------------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS: Additions 284,106 1,540,028 26,138 70,833 291,119 Reductions (247,476) (214,834) (122,080) (134,984) (91,958) ----------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from transactions in investors' beneficial interests 36,630 1,325,194 (95,942) (64,151) 199,161 ----------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 1,314,357 1,619,346 13,678 (77,980) 681,790 NET ASSETS: Beginning of period 6,232,542 4,613,196 567,426 645,406 1,999,603 ----------------------------------------------------------------------------- End of period $ 7,546,899 $ 6,232,542 $ 581,104 $ 567,426 $ 2,681,393 ----------------------------------------------------------------------------- Year Ended August 31, 1996 INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income $ 23,394 Net realized gain on investments 240,765 Change in net unrealized appreciation of investments (30,217) Net increase (decrease) in net assets resulting from operations 233,942 TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS: Additions 309,196 Reductions (167,061) Net increase (decrease) in net assets resulting from transactions in investors' beneficial interests 142,135 NET INCREASE (DECREASE) IN NET ASSETS 376,077 NET ASSETS: Beginning of period 1,623,526 End of period $ 1,999,603
SEE NOTES TO FINANCIAL STATEMENTS 49 NOTES TO FINANCIAL STATEMENTS February 28, 1997 (Unaudited) - ---------------------------------------------------------------------- Equity Managers Trust NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: 1) GENERAL: Neuberger&Berman Focus Portfolio ("Focus"), Neuberger&Berman Guardian Portfolio ("Guardian"), Neuberger&Berman Manhattan Portfolio ("Manhattan"), and Neuberger&Berman Partners Portfolio ("Partners") (collectively, the "Portfolios") are separate operating series of Equity Managers Trust ("Managers Trust"), a New York common law trust organized as of December 1, 1992. Managers Trust is registered as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). Other regulated investment companies sponsored by Neuberger& Berman Management Incorporated ("Management"), whose financial statements are not presented herein, also invest in Managers Trust. The assets of each series belong only to that series, and the liabilities of each series are borne solely by that series and no other. 2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the notes following the Portfolios' Schedule of Investments. 3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange of such currency against the U.S. dollar to determine the value of investments, other assets and liabilities. Purchase and sale prices of securities, and income and expenses are translated into U.S. dollars at the prevailing rate of exchange on the respective dates of such transactions. 4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Dividend income is recorded on the ex-dividend date or, for certain foreign dividends, as soon as the Portfolio becomes aware of the dividends. Interest income, accretion of original issue discount, where applicable, and accretion of discount on short-term investments is recorded on the accrual basis. Realized gains and losses from securities transactions and foreign currency transactions are recorded on the basis of identified cost. 5) FEDERAL INCOME TAXES: Managers Trust intends to comply with the requirements of the Internal Revenue Code of 1986, as amended. Each Portfolio of Managers Trust also intends to conduct its operations so that each of its investors will be able to qualify as a regulated investment company. Each Portfolio will be treated as a partnership for Federal income tax purposes and is therefore not subject to Federal income tax. 6) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign tax authorities, net of refunds recoverable. 50 7) ORGANIZATION EXPENSES: Expenses incurred by each Portfolio in connection with its organization are being amortized by that Portfolio on a straight-line basis over a five-year period. At February 28, 1997, the unamortized balance of such expenses amounted to $12,399, $36,364, $13,840, and $25,205, for Focus, Guardian, Manhattan, and Partners, respectively. 8) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations. Expenses incurred by Managers Trust with respect to any two or more Portfolios are allocated in proportion to the net assets of such Portfolios, except where a more appropriate allocation of expenses to each Portfolio can otherwise be made fairly. Expenses directly attributable to a Portfolio are charged to that Portfolio. 9) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered call option are recorded in the liability section of each Portfolio's Statement of Assets and Liabilities and are subsequently adjusted to the current market value. When an option is exercised, closed, or expires, the Portfolio realizes a gain or loss and the liability is eliminated. A Portfolio bears the risk of a decline in the price of the security during the period, although any potential loss during the period would be reduced by the amount of the option premium received. In general, written covered call options may serve as a partial hedge against decreases in value in the underlying securities to the extent of the premium received. All securities covering outstanding options are held in escrow by the custodian bank. Summary of option transactions for the six months ended February 28, 1997:
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 -----------------------------
51 10) SECURITY LENDING: Portfolio securities loans involve certain risks in the event a borrower should fail financially, including delays or inability to recover the lent securities or foreclose against the collateral. The investment manager, under the general supervision of Managers Trust's Board of Trustees, monitors the creditworthiness of the parties to whom the Portfolios make security loans. The Portfolios will not lend securities on which covered call options have been written, or lend securities on terms which would prevent each of their investors from qualifying as a regulated investment company. Portfolio securities loans to Neuberger&Berman, LLC ("Neuberger"), the Portfolios' principal broker and sub-adviser, are made in accordance with an exemptive order issued by the Securities and Exchange Commission under the 1940 Act. The Portfolios receive cash as collateral against the lent securities, which must be maintained at not less than 100% of the market value of the lent securities during the period of the loan. The Portfolios receive income earned on the lent securities and a portion of the income earned on the cash collateral. During the six months ended February 28, 1997, Focus, Guardian, Manhattan, and Partners lent securities to Neuberger. At February 28, 1997, cash collateral received by Focus, Guardian, Manhattan, and Partners, was equal to or in excess of 100% of the market value of the loaned securities. 11) REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements with institutions that each Portfolio's investment manager has determined are creditworthy. Each repurchase agreement is recorded at cost. A Portfolio requires that the securities purchased in a repurchase transaction be transferred to the custodian in a manner sufficient to enable a Portfolio to obtain those securities in the event of a default under the repurchase agreement. A Portfolio monitors, on a daily basis, the value of the securities transferred to ensure that their value, including accrued interest, is greater than amounts owed to a Portfolio under each such repurchase agreement. NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES: Each Portfolio retains Management as its investment manager under a Management Agreement. For such investment management services, each Portfolio pays Management a fee at the annual rate of 0.55% of the first $250 million of that Portfolio's average daily net assets, 0.525% of the next $250 million, 0.50% of the next $250 million, 0.475% of the next $250 million, 0.45% of the next $500 million, and 0.425% of average daily net assets in excess of $1.5 billion. All of the capital stock of Management is owned by individuals who are also principals of Neuberger, a member firm of The New York Stock Exchange and sub- adviser to each Portfolio. Neuberger is retained by Management to furnish it with 52 investment recommendations and research information without cost to each Portfolio. Several individuals who are officers and/or trustees of Managers Trust are also principals of Neuberger and/or officers and/or directors of Management. Each Portfolio has an expense offset arrangement in connection with its custodian contract. The impact of this arrangement, reflected in the Statement of Operations under the caption Custodian fees was a reduction of $939, $1,595, and $895 for Focus, Guardian, and Partners, respectively, which is less than .01% of each Portfolio's average daily net assets. NOTE C -- SECURITIES TRANSACTIONS: During the six months ended February 28, 1997, there were purchase and sale transactions (excluding short-term securities and option contracts written) as follows:
PURCHASES SALES - --------------------------------------------------------------------- FOCUS $ 530,416,045 $ 518,273,318 GUARDIAN 1,616,370,266 1,397,631,626 MANHATTAN 126,828,594 227,455,028 PARTNERS 1,006,818,489 742,840,515
During the six months ended February 28, 1997, there were brokerage commissions on securities paid to Neuberger and other brokers as follows:
NEUBERGER OTHER BROKERS TOTAL - -------------------------------------------------------------------------------------- FOCUS $ 643,449 $ 552,787 $ 1,196,236 GUARDIAN 2,261,803 1,712,015 3,973,818 MANHATTAN 274,937 119,821 394,758 PARTNERS 1,782,038 612,466 2,394,504
In addition, Neuberger's share of the total interest income earned for the six months ended February 28, 1997, from the collateralization of securities loaned to or through Neuberger was $242,525, $1,338,584, $336,304, and $214,684, for Focus, Guardian, Manhattan, and Partners, respectively. 53 NOTE D -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
FOCUS BALANCE OF GROSS GROSS BALANCE OF SHARES HELD PURCHASES SALES SHARES HELD VALUE AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28, NAME OF ISSUER: 1996 ADDITIONS REDUCTIONS 1997 1997 - -------------------------------------------------------------------------------------------- DT Industries 0 640,000 0 640,000 $ 18,880,000
GUARDIAN BALANCE OF GROSS GROSS BALANCE OF SHARES HELD PURCHASES SALES SHARES HELD VALUE AUGUST 31, AND AND FEBRUARY 28, FEBRUARY 28, NAME OF ISSUER: 1996 ADDITIONS REDUCTIONS 1997 1997 - -------------------------------------------------------------------------------------------- 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 E -- UNAUDITED FINANCIAL INFORMATION: The financial information included in this interim report is taken from the records of each Portfolio without audit by independent accountants/auditors. Annual reports contain audited financial statements. 54 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Equity Managers Trust
FOCUS GUARDIAN PORTFOLIO PORTFOLIO Period from Six August Six Months 2, Months Ended 1993(1) Ended Year February to February Ended 28, August 28, August 1997 Year Ended August 31, 31, 1997 31, (UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996 -------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses .53%(2) .54% .57% .58% .58%(2) .46%(2) .46% -------------------------------------------------------------------------------------- Net Investment Income .57%(2) 1.04% 1.05% 1.16% 1.46%(2) .91%(2) 1.72% -------------------------------------------------------------------------------------- Portfolio Turnover Rate 42% 39% 36% 52% 4% 20% 37% -------------------------------------------------------------------------------------- Average Commission Rate Paid $0.0569 $0.0578 -- -- -- $0.0538 $0.0580 -------------------------------------------------------------------------------------- Net Assets, End of Period (in millions) $1,339.3 $1,122.4 $969.2 $645.0 $574.0 $7,546.9 $6,232.5 -------------------------------------------------------------------------------------- Period from August 2, 1993(1) to August 31, 1995 1994 1993 RATIOS TO AVERAGE NET ASSETS: Expenses .48% .50% .51%(2) Net Investment Income 1.72% 1.66% 2.45%(2) Portfolio Turnover Rate 26% 24% 3% Average Commission Rate Paid -- -- -- Net Assets, End of Period (in millions) $4,613.2 $2,480.3 $1,777.6
1) The date investment operations commenced. 2) Annualized. 55 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Equity Managers Trust
MANHATTAN PARTNERS PORTFOLIO PORTFOLIO Period from Six August Six Months 2, Months Ended 1993(1) Ended Year February to February Ended 28, August 28, August 1997 Year Ended August 31, 31, 1997 31, (UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996 -------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: Expenses .59%(2) .58% .59% .59% .59%(2) .49%(2) .51% -------------------------------------------------------------------------------------- Net Investment Income .02%(2) .13% .42% .53% .55%(2) .99%(2) 1.26% -------------------------------------------------------------------------------------- Portfolio Turnover Rate 22% 53% 44% 50% 3% 33% 96% -------------------------------------------------------------------------------------- Average Commission Rate Paid $0.0587 $0.0373 -- -- -- $0.0480 $0.0494 -------------------------------------------------------------------------------------- Net Assets, End of Period (in millions) $581.1 $567.4 $645.4 $521.7 $536.8 $2,681.4 $1,999.6 -------------------------------------------------------------------------------------- Period from August 2, 1993(1) to August 31, 1995 1994 1993 RATIOS TO AVERAGE NET ASSETS: Expenses .53% .54% .54%(2) Net Investment Income 1.13% .75% 1.19%(2) Portfolio Turnover Rate 98% 75% 8% Average Commission Rate Paid -- -- -- Net Assets, End of Period (in millions) $1,623.5 $1,340.3 $1,182.1
1) The date investment operations commenced. 2) Annualized. 56 OTHER INFORMATION DIRECTORY INVESTMENT MANAGER, ADMINISTRATOR AND DISTRIBUTOR Neuberger&Berman Management Incorporated 605 Third Avenue 2nd Floor New York, NY 10158-0180 800-877-9700 Institutional Services 800-366-6264 SUB-ADVISER Neuberger&Berman, LLC 605 Third Avenue New York, NY 10158-3698 CUSTODIAN AND SHAREHOLDER SERVICING AGENT State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 ADDRESS CORRESPONDENCE TO: Neuberger&Berman Funds Institutional Services 605 Third Avenue 2nd Floor New York, NY 10158-0180 LEGAL COUNSEL Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW 2nd Floor Washington, DC 20036-1800 OFFICERS AND TRUSTEES Stanley Egener CHAIRMAN OF THE BOARD AND TRUSTEE Lawrence Zicklin PRESIDENT AND TRUSTEE Faith Colish TRUSTEE Donald M. Cox TRUSTEE Alan R. Gruber TRUSTEE Howard A. Mileaf TRUSTEE Edward I. O'Brien TRUSTEE John T. Patterson, Jr. TRUSTEE John P. Rosenthal TRUSTEE Cornelius T. Ryan TRUSTEE Gustave H. Shubert TRUSTEE Daniel J. Sullivan VICE PRESIDENT Michael J. Weiner VICE PRESIDENT Richard Russell TREASURER Claudia A. Brandon SECRETARY Barbara DiGiorgio ASSISTANT TREASURER Celeste Wischerth ASSISTANT TREASURER Stacy Cooper-Shugrue ASSISTANT SECRETARY C. Carl Randolph ASSISTANT SECRETARY Neuberger&Berman Management Inc., Neuberger&Berman Focus Assets, Neuberger&Berman Guardian Assets, Neuberger&Berman Manhattan Assets, and Neuberger&Berman Partners Assets are registered service marks of Neuberger&Berman Management Inc. [COPYRIGHT] 1997 Neuberger&Berman Management Inc. 57 Neuberger&Berman Management Inc. -Registered Trademark- 605 THIRD AVENUE 2ND FLOOR NEW YORK, NY 10158-0180 SHAREHOLDER SERVICES 800.877.9700 INSTITUTIONAL SERVICES 800.366.6264 Statistics and projections in this report are derived from sources deemed to be reliable but cannot be regarded as a representation of future results of the Funds. This report is prepared for the general information of shareholders and is not an offer of shares of the Funds. Shares are sold only through the currently effective prospectus, which must precede or accompany this report. (recycle PRINTED ON RECYCLED PAPER logo) NBASAR000297 -----END PRIVACY-ENHANCED MESSAGE-----