N-30D 1 finaltextfile.txt [LOGO] Neuberger Berman Semi-Annual Report February 28, 2002 Neuberger Berman Equity Funds INVESTOR CLASS SHARES TRUST CLASS SHARES ADVISOR CLASS SHARES INSTITUTIONAL CLASS SHARES Century Fund Fasciano Fund Focus Fund Genesis Fund Guardian Fund International Fund Manhattan Fund Millennium Fund Partners Fund Regency Fund Socially Responsive Fund Technology Fund Contents The Funds Chairman's Letter 2 Portfolio Commentary/ Performance Highlights Century Fund 4 Fasciano Fund 6 Focus Fund 8 Genesis Fund 10 Guardian Fund 12 International Fund 14 Manhattan Fund 16 Millennium Fund 18 Partners Fund 20 Regency Fund 22 Socially Responsive Fund 24 Technology Fund 26 Schedule of Investments/ Top Ten Equity Holdings Century Fund 30 Fasciano Fund 32 Focus Fund 34 Genesis Fund 35 Guardian Fund 37 International Fund 39 Manhattan Fund 42 Millennium Fund 44 Partners Fund 46 Regency Fund 48 Socially Responsive Fund 50 Technology Fund 51
Financial Statements 54 Financial Highlights (All Classes) Per Share Data Century Fund 85 Fasciano Fund 86 Focus Fund 87 Genesis Fund 89 Guardian Fund 91 International Fund 93 Manhattan Fund 94 Millennium Fund 96 Partners Fund 97 Regency Fund 99 Socially Responsive Fund 100 Technology Fund 101 Directory 104 Trustees and Officers 105
"Neuberger Berman" and the Neuberger Berman logo are service marks of Neuberger Berman, LLC. "Neuberger Berman Management Inc." and the individual fund names in this shareholder report are either service marks or registered service marks of Neuberger Berman Management Inc. (C)2002 Neuberger Berman Management Inc. All rights reserved. 1 Chairman's Letter [PHOTO] Peter Sundman Dear Fellow Shareholder, The past six months have showed America at its best. Americans responded with unity and resolve to the terrorist crisis. Our military led us to a quick victory in Afghanistan, an important first step in suppressing global terrorism. At home, supported by low interest rates, good bargains, and confidence that America would prevail in the war on terrorism, U.S. consumers led us out of a mild and short-lived recession. After the initial shock of September 11, 2001 and a week of panic selling, the equities markets rebounded, reflecting investors' recognition of the resilience of the American economy. Where does the stock market go from here? We have no crystal ball that reveals the future, but we remain confident that over the longer term, our economy will continue to expand, helping financially sound, well-managed companies prosper. Neuberger Berman analysts and portfolio managers will continue to strive to identify the best investment opportunities in all sectors of the market. In this six-month reporting period, the value style of investing once again outperformed the growth style, albeit by a smaller margin than in fiscal 2001. We are pleased by the performance of our value funds, but it is important to remember that no single investment style will prevail year-in and year-out. Historically, growth stocks tend to outperform as the economy emerges from recession. In fact, growth stocks improved late in this reporting period as economic data indicated the economy was strengthening. We believe that over the longer term, the outcome of the investment marathon will not be determined by style, but rather by the talent and dedication of investment managers in both the growth and value camps. In short, identifying quality companies trading at opportunistic prices will be the key to long-term investment success. America experienced a tragedy of a different sort in the first half of fiscal 2002. Enron, a large and respected corporation in an important industry, went bankrupt. The company's failure, however, was not the biggest loss. Free economies such as ours will always have corporate casualties and sometimes "the bigger they are, the harder they fall". The tragedy is the potential weakening of confidence in corporate integrity and U.S. accounting standards. 2 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) It is our hope that lessons will be learned from this tragedy. Investors who in the past might have blindly followed "hot stocks" will rediscover the value of fundamental, unbiased equity research. On the regulatory front, while we generally don't favor more government regulation, we would applaud constructive regulations to ensure that companies provide investors an honest accounting of their financial condition and profitability. Investors should not have to dig through pages of small print footnotes or have to unravel accounting gimmicks to determine the financial health of a company. We also think employees in qualified retirement plans should be allowed to receive better education about prudent investment principles, especially the value of diversification. As I write, (the second week of March), the stock market has been rallying strongly. Whether or not the rally continues, I would urge you to remember that we enjoyed historically outsized returns during the long bull market that began in the Fall of 1982 and ended in the Spring of 2000. Stock market returns over the next decade will probably not be as high. We encourage shareholders to plan accordingly. That means investing, not speculating, and focusing on your important goals, such as educating children and building a sufficient retirement nest egg. We also encourage investors to diversify both by investment style (growth and value) and market capitalization (large-, mid-, and small-cap stocks). That's why Neuberger Berman provides a diversified menu of mutual funds, with offerings in all the style and market capitalization categories. In closing, I would like to express my appreciation to Gustave H. Shubert, who has served as a Trustee of the Neuberger Berman Funds for more than a decade, and has retired this year. During his tenure as a Fund Trustee, Gus demonstrated a dedication to representing shareholders' interests, and consistently contributed his great wisdom and insight. We will miss the pleasure of his distinguished company and wish him the very best. Sincerely, /s/ Peter Sundman PETER SUNDMAN CHAIRMAN OF THE BOARD NEUBERGER BERMAN EQUITY FUNDS 3 Century Fund Portfolio Commentary The first half of fiscal 2002 was a difficult period for large-cap growth stocks. Although leading market indices made substantial progress after bottoming in the weeks following the September 11 terrorist attacks, growth continued to lag value by a significant margin. However, we expect the economy and growth-stock earnings to regain momentum in the year ahead. Technology continued to be the Achilles' heel of growth stock investors and the Century portfolio. We were modestly overweighted in the tech sector and, overall, our technology holdings underperformed the tech component of the Russell 1000 Growth Index benchmark. We believe this is largely a function of our owning tech stocks with a history of faster growth, which were punished more severely for earnings shortfalls. With the exception of communications technology (where we have very limited exposure), we think technology is on the road to recovery. Going forward, we expect the sector to benefit substantially from "easy" quarterly earnings comparisons, particularly in the second half of calendar 2002. Our utilities holdings, primarily power generator/energy trader Dynegy, also disappointed. Although we believe Dynegy will ultimately profit from the demise of its leading competitor, Enron, the stock was tainted by uncertainty created by Enron's collapse. The Enron debacle also took its toll on Tyco, our worst-performing stock in the first half of fiscal 2002. We think Tyco is a good company, but its complex financials and lack of earnings transparency spooked investors in the wake of the Enron accounting scandal. We were also disappointed in the company's decision to break itself into four pieces. We eliminated both positions from our portfolio. Healthcare was the brightest spot in the Century portfolio, with stable earners such as Pfizer and Johnson & Johnson making our top-ten performance list. Consumer stocks, most notably discount retailer Target Corp. and Kraft Foods, also contributed to performance. We continue to favor select discounters such as Target and Costco, which we expect to benefit from the troubles of their --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Century Fund /1/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year Life of Fund Investor Class /3b/ 12/06/1999 (3.85%) (5.76%) (16.67%) Russell 1000 Growth Index /2/ (2.41%) (2.00%) (17.68%) S&P 500 Index /2/ (1.67%) 0.24% (8.00%)
The composition, industries and holdings of the Fund are subject to change. Century Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 4 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) competitor, Kmart. We have also invested in Best Buy, a leading consumer electronics discounter, whose sales and earnings we expect to accelerate with the growing popularity of new digital products. Slot machine manufacturer International Game Technology was another big gainer, on strong earnings augmented by its acquisition of Anchor Gaming. Strategically, we are modestly shifting our bias from the "steady-Eddie" earners that have done so well over the last year to more economically sensitive growth stocks that we believe will outperform in the year ahead. Economic data released shortly after the end of this reporting period indicate we have emerged from a mild recession and are in the early stages of an economic recovery, which we expect to gain momentum in the second half of 2002. In his most recent testimony to Congress, the normally reserved Federal Reserve Chairman Alan Greenspan was surprisingly upbeat regarding the economy. While this very probably signals an end to a long series of Fed rate cuts, we believe that interest rates will remain low and continue to sustain consumer spending. In most industries, inventories have been depleted and we are beginning to see "demand pull" generate increased manufacturing activity and business investment. Extensive cost cutting and improved productivity have substantially lowered corporate break-even points. Consequently, revenue increases should magnify profits. Going forward, we expect to benefit from what we refer to as "The Pendulum Effect." During periods in which the economy is slowing, Wall Street analysts never seem to be able to reduce earnings estimates fast enough to reflect the changing economic reality. During periods when the economy is accelerating, they can't seem to raise estimates fast enough. Last year, we saw a record number of earnings disappointments. In the year ahead, we think we will experience a greater number of pleasant earnings surprises. Since we focus on companies we believe are capable of beating Wall Street earnings estimates, this could be a much more productive environment for our discipline. In closing, growth has been "out" and value has been "in" over the last couple of years. We are reminded that just two years ago (after approximately five years of exceptional growth stock performance), almost everyone was in the growth camp and value investing had been declared dead. Today, the reverse is true. Taking nothing away from our value-investing colleagues at Neuberger Berman, we are committed to the growth style and believe that over the longer term, owning companies that consistently grow earnings faster than the market average produces superior investment returns. Sincerely, /s/ Brooke A. Cobb BROOKE A. COBB PORTFOLIO MANAGER 5 Fasciano Fund Portfolio Commentary With the stock market continuing to reward selective small-cap investors in the first half of fiscal 2002, the Fasciano Fund significantly outperformed its Russell 2000 benchmark. Our consumer discretionary holdings -- primarily media companies (television and radio broadcasters, and publishers) -- were the greatest contributors to returns during this reporting period, with Westwood One, McClatchy, Emmis Communications and Meredith Corp. all making our top-ten performance list. We have owned many of these companies for some time because of generally good cash-flow fundamentals and the fact that we believe deregulation will generate another round of consolidation in the media industry, which should help boost stock prices. Deregulation has been gaining momentum. On February 19, 2002, the District of Columbia Court of Appeals struck down FCC restrictions on the ownership of cable and broadcast television properties in the same markets. It is expected that rules currently preventing companies from owning television stations and newspapers in the same market will be eliminated this summer. Clear Channel Communications recently announced its acquisition of Ackerley Group, one of our portfolio holdings, confirming the value we see in select media businesses. Even if merger and acquisition activity does not accelerate, we expect cash flow and earnings for advertising-supported media companies to trend higher as the economy strengthens. Our second-best performing group was the financials. Those posting strong gains included American Capital Strategies, a buyout and specialty finance company that supplies senior and subordinated debt to small businesses and sometimes provides equity capital; and HCC Insurance, a long-time holding. Other top performers included premium hand-tool maker Snap-on Inc., whose restructuring program is finally paying off in improved cash flow (currently being used to pay down debt and buy back stock), and G&K Services, --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Fasciano Fund /1,7/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years 10 Years Investor Class 11/10/1988 4.88% 23.37% 12.04% 12.23% Russell 2000 Index /2/ 0.86% 13.98% 9.52% 11.14%
The risks involved in seeking capital appreciation from investments primarily in companies with small market capitalization are set forth in the prospectus and statement of additional information. This Fund is the successor to Fasciano Fund, Inc. The total return data shown through March 23, 2001 are those of its predecessor, Fasciano Fund, Inc. The Inception date for the Fasciano Fund, Inc. was 11/10/88. The composition, industries and holdings of the Fund are subject to change. Fasciano Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 6 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) a uniform rental company, whose fundamentals we expect to improve as jobs are restored in the economic recovery. Healthcare was the sickest sector in the portfolio. In general, healthcare stocks weakened as investors rotated out of defensive sectors into more economically sensitive groups. Recently, we took profits in SRI Surgical Express, because its business was showing some weakness. Rehabcare Group's fundamentals turned south shortly after we invested in the stock, causing us to move to the sidelines while we reassess the company's outlook. We gave back some profits in KV Pharmaceuticals, when the company failed to meet consensus earnings expectations. However, we still think its value-added branded and generic prescription drug strategies will be successful in the long run. As our longtime shareholders know, we don't spend much time on economic forecasting. We believe that if we can identify and invest in well managed, financially healthy companies growing by 15%-25% per year and generating strong free cash flow, we will continue to produce satisfactory long-term returns for our shareholders. So, we won't say much about the economy other than that it appears to us to be getting back on solid footing and we expect to see better corporate earnings in the year ahead. We think there is a good chance that small-cap stocks can extend their string of two years of superior performance relative to large-caps. There are several forces that could work in our favor. We expect sales and earnings to grow faster in the year ahead as the economy accelerates. Also, because of small-caps' strong performance in recent years, money is flowing into this sector. If this continues, it should provide a performance tailwind. In addition, in the wake of the Enron scandal, investors may favor smaller companies, which generally are easier to understand and analyze than their larger counterparts. It's worth noting that stock prices are not cheap by historical measures, which increases risk. However, valuations of small-caps look more attractive to us than for large-caps, and low interest rates support higher P/E ratios, which we believe tempers some of the risk in the small-cap sector. We expect to see some shift out of value and into growth if the economy recovers and the tone of the market improves in the year ahead. However, we don't think we will see a return to aggressive speculation in small-cap growth stocks. Rather, we think investors will still favor real companies with real earnings, rather than the "lots of sizzle, little substance" stocks, which burned small-cap investors so badly in years past. We feel comfortable aiming for the sweet spot between growth and value as core small-cap investors. Sincerely, /s/ Michael F. Fasciano MICHAEL F. FASCIANO PORTFOLIO MANAGER 7 Focus Fund Portfolio Commentary In this reporting period the Focus Fund underperformed its benchmarks, the Standard & Poor's 500 and the Russell 1000 Value Index. While my attitude towards excuses is to neither make them nor take them, I would point out that this period included the nadir of the first U.S. recession in 10 years and the worst attack on our country in its history. I truly believe it was not a normal time. The recession and the attacks combined to call into question the hoped-for economic recovery, and this pressured some of our holdings that are considered sensitive to the overall economy: in particular, J.P. Morgan, Capital One and Amkor. Interestingly, some of the stocks that did relatively well for us during this period -- Furniture Brands, TJX, and Citigroup -- benefited from the Federal Reserve's interest rate cuts, the result of a weakening economy. Investors anticipated that lower rates would lead to economic recovery which would in turn benefit housing (Furniture Brands), the consumer (TJX), and global commerce (Citigroup). It may appear contradictory that the stocks which hurt the Fund did so because of their ties to a weakening economy, while those that helped the Fund were perceived to be beneficiaries of an improving economy. Regarding this, I would make two observations: The first is that the stocks which did well are perceived to be "early cycle" stocks in that they benefit sooner than most from an economic recovery. Second, one can not underestimate the psychological and emotional impact that September 11 had on the people who live and work in the financial markets, where the worst of the attacks took place. In the weeks immediately following the attacks there was a fair amount of activity in the market that, in my opinion, was not entirely rational. During periods such as this the best approach, in my opinion, is to try to make judgments that are reasoned. Rather than give in to the chaos, I try to take advantage of it. This is what I sought to do in the wake of September 11. It seemed to me at the time that the Fed response would be to flood the --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Focus Fund /1, 10/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years 10 Years Investor Class 10/19/1955 (5.60%) 5.59% 13.98% 15.56% Trust Class /3a, 5/ 08/30/1993 (5.73%) 5.33% 13.82% 15.80% Advisor Class /3a, 6/ 09/03/1996 (5.74%) 5.09% 14.40% 15.73% Russell 1000 Value Index /2/ (0.79%) 4.39% 11.46% 14.49% S&P 500 Index /2/ (1.67%) 0.24% 10.17% 13.25%
The composition, industries and holdings of the Fund are subject to change. While the value-oriented approach is intended to limit risks, the Fund -- 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 see Endnotes for additional information. 8 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) system with liquidity, since that is what it has almost always done in periods of crisis. And in fact it did so. I believe the Fed's stimulus, together with the federal tax cuts, drop in energy prices and the interest rate cuts already enacted, should lead to an economic recovery. Post-September 11, I sought to get more exposure to those sectors of the market that I expect to benefit from a rebound in the economy. I believe this makes sense not only from an economic point of view, but also takes advantage of those areas in which I felt the price weak-ness created by the panic selling was most pronounced. The Focus Fund has always sought to invest in good companies whose stocks are undervalued because of either a misperception or a temporary problem. During the latter part of 2001 and the early part of 2002 there seemed to be an abundance of such stocks, and we invested accordingly. We increased our exposure to the economy by purchasing more Celestica and International Rectifier for example. Also, it seemed to me that the consumer would prove to be far more resilient than Wall Street was assuming, and so we increased our positions in Capital One and some of our retail holdings. Lastly, whenever there has been an aggressive easing by the Federal Reserve the equity markets have virtually always recovered, which has in turn led to good gains by the brokerage stocks. With this in mind, and with those stocks under severe pressure, we added to our holdings in Merrill Lynch and recently began increasing our holdings of Lehman Brothers. I believe the Fund is now positioned to benefit from a recovery in the economy and the equity markets. However, I would like to stress this does not mean that the Fund is being invested on the basis of some macro-economic point of view. The portfolio is still being constructed on a stock by stock basis with valuation the primary consideration. The proof is in the numbers: at the end of February the forward price-earnings (P/E) ratio of the Focus Fund was 17.6 times estimated 2002 earnings. This is the same as the P/E ratio of the Russell 1000 Value Index and 16% lower than the S&P 500. What is even more important, however, is that the expected growth in earnings-per-share over the next three to five years was 18% per year for the Focus holdings as opposed to 11% for the Russell 1000 Value and 14% for the S&P 500. In other words, for the same valuation as the Russell 1000 Value Index, the Fund is getting an expected earnings growth that is 60% higher, and although our P/E ratio is 16% lower than the S&P's, the earnings-per-share growth is 30% higher. This approach has served the Fund well in the past, and I believe it will in the future. Sincerely, /s/ Kent Simons KENT SIMONS PORTFOLIO MANAGER 9 Genesis Fund Portfolio Commentary The Russell 2000 Index was among the best performing equity indices during the first half of fiscal 2002; we are pleased to have substantially outperformed this small-cap benchmark. Stock selection deserves much of the credit for the Fund's excellent absolute and relative returns. To wit, our top-ten performance list contains stocks from seven of the nine market sectors we were invested in during this reporting period. Reviewing portfolio performance on a sector basis, our consumer discretionary investments, most notably restaurants and housing-related retailers, made the largest contribution to returns. Our case for restaurant stocks was based on a combination of factors: Demand, which has always been relatively stable, has been trending modestly higher, while supply growth has slowed considerably in recent years, due to inattention from the capital markets, which have been busy funding the technology and telecommunications sectors. The end result is that profit margins are expanding and cash flow and earnings are growing nicely. We earned very generous returns from restaurant holdings such as CEC Entertainment (Chucky Cheese), AFC Enterprises (Popeye's, Church's Fried Chicken, Cinnabon), Brinker (Chili's) and Outback Steakhouse. Our investments in Furniture Brands (Thomasville, Henredon, Drexel-Heritage) and Mohawk, a leading manufacturer and retailer of carpeting, also performed well. Furniture Brands has been an aggressive acquirer of upscale furniture manufacturers and is now among the dominant players in this niche. The company is benefiting both from economies of scale and waning competition resulting from consolidation in the industry. It's worth mentioning that Berkshire Hathaway's Warren Buffett, a smart fellow with a great record of buying strong free-cash-flow-generating businesses, has been actively buying small regional furniture retailers. Although the energy sector did not perform particularly well, our energy holdings excelled, with --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Genesis Fund /1/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years 10 Years Investor Class /3a/ 09/27/1988 8.37% 21.87% 16.28% 15.07% Trust Class /3a, 5/ 08/26/1993 8.34% 21.83% 16.26% 15.11% Advisor Class /3a, 6/ 04/02/1997 8.19% 21.56% 16.00% 14.93% Institutional Class /3b, 8/ 07/01/1999 8.48% 22.18% 16.49% 15.17% Russell 2000 Index /2/ 0.86% 13.98% 9.52% 11.14%
This fund is currently closed to new investors. The risks involved in seeking capital appreciation from investments primarily in companies with small market capitalization are set forth in the prospectus and statement of additional information. The composition, industries and holdings of the Fund are subject to change. Genesis Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 10 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) stocks such as XTO Energy, National Oilwell, and Nabors posting excellent gains. We are somewhat surprised that investors, who have been rotating into more economically sensitive industry groups, haven't yet shown much enthusiasm for energy stocks. Depressed oil and natural gas prices have stabilized, and we expect them to trend higher as energy demand recovers along with the economy. We think a company such as Nabors, which controls a huge percentage of the nation's onshore drilling rigs, has enormous leverage and earnings power in an environment in which firming energy prices should stimulate more exploration activity. Our investments in property and casualty insurance underwriters (W. R. Berkley), brokers (Brown & Brown), and re-insurers (Partner Re Ltd.) performed well. Policy pricing, which was firming prior to the tragic events of September 11, really improved after the terrorist attacks. This should lead to higher profit margins and profitability for everyone involved in the property and casualty insurance business. Our holdings in the industrial sector, most notably defense companies Alliant Techsystems and United Defense Industries, also contributed to returns. Alliant is a leader in missile propulsion systems and is expected to be a major beneficiary of the proposed national missile defense system. United Defense Systems specializes in technologically sophisticated weapons systems for mobile military units including tanks and ships. United has a large installed base and has had very consistent cash flow coming from continual upgrades to its weapons systems. Materials is one of just two market sectors in which the Fund's holdings did not generate positive returns. (Our utilities investments, which were all sold by the close of this reporting period, also declined.) Currently our only holding in this group, packaging company AptarGroup, experienced an earnings shortfall as inventories were reduced in the household product and pharmaceuticals industries. We have owned Aptar for a long time because it is well positioned in its packaging niche (pump sprays and valves). We believe the stock will recover as inventories are restocked in the year ahead. It is said that growth stock investors come equipped with sunglasses and value investors with umbrellas. This bias duly noted, we have reservations about the economy and stock market in the year ahead. Generally, strong economic recoveries are fueled by pent-up consumer demand. The consumer has been spending quite freely through this mild and short-lived recession. Consequently, we don't see end-demand surging in the year ahead. We also worry that low interest rates and energy prices, which have helped stabilize the economy, are now trending higher. Our conclusion is that while we may see impressive GDP growth over the next two or three quarters as depleted inventories are restocked, the economy may not be able to sustain this kind of growth for an extended period, disappointing equities investors. In short, we expect to see the kind of market environment in which disciplined small-cap value investing will continue to outperform strategies that count on a strong economic rebound. Sincerely, /s/ Judith M. Vale /s/ Robert D'Alelio JUDITH M. VALE AND ROBERT D'ALELIO PORTFOLIO CO-MANAGERS 11 Guardian Fund Portfolio Commentary The first half of fiscal 2002 was dominated by two events -- the September 11 terrorist attacks and, later in the reporting period, Enron's bankruptcy. Initially, both events had negative consequences for the equity markets. However, they also created value investment opportunities for the Fund, some of which have already rewarded us, and others of which we believe will help enhance performance in the year ahead. The events of 9/11 virtually guaranteed that the economy would go into recession -- if it hadn't been in one already. Inventories -- already being reduced -- were aggressively liquidated, and corporate capital spending plans were put on hold. In the week following its reopening, the stock market spiraled lower, creating pockets of exceptional value. Importantly, the tragedy triggered a quick response from the Federal Reserve, which instituted four additional short-term interest rate cuts, and from Congress, which provided selective fiscal stimulus. With interest rates low and virtually everything on sale, the deal-loving American con sumer almost single-handedly lifted the economy out of recession. We responded to these changes quickly, taking advantage of value opportunities in beaten down sectors, most notably the travel and lodging industry. We didn't know how long it would take for people to recover from the shock of the terrorist attacks and begin traveling and vacationing again. However, we were confident they would do so eventually, and that we could earn good returns from buying high quality companies such as Sabre Holdings, MGM Mirage, Carnival Cruise Lines, and American Express at very attractive valuations. These stocks were the perfect candidates for classic Graham & Dodd value analysis. For example, in looking at Carnival Cruise, we calculated its break-up value (the liquidating value of its fleet) at $12-$15 per share. We were able to buy the stock at a slight premium to this asset value. While we were prepared to be patient with these stocks, we didn't have to wait long to be rewarded. --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Guardian Fund /1,9/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years 10 Years Investor Class 06/01/1950 (1.16%) 3.99% 5.03% 10.32% Trust Class /5/ 08/03/1993 (1.22%) 3.87% 4.95% 10.26% Advisor Class /3a, 6/ 09/03/1996 (1.32%) 3.57% 4.38% 9.94% Russell 1000 Value Index /2/ (0.79%) 4.39% 11.46% 14.49% S&P 500 Index /2/ (1.67%) 0.24% 10.17% 13.25%
The composition, industries and holdings of the Fund are subject to change. Guardian Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 12 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Most made big moves, inspiring us to trim some positions and totally eliminate others. We didn't own any Enron, but we did have positions in stocks that suffered directly and indirectly from the fall-out of the Enron scandal. Our modest utility stock portfolio included Dynegy and Williams Companies, two of Enron's competitors in the power generation/energy trading business. Although both could reasonably be expected to benefit from the demise of a major competitor, Enron's failure brought scrutiny to relatively highdebt levels in this sector and investors became wary. We sold out of Dynegy but later re-opened a position on weakness and also increased our position in El Paso, another Enron competitor. One of our telecom holdings, Worldcom, came under pressure, due to concern about its aggressive accounting policies. We think Worldcom is in decent shape financially, and that the telecom sector (once again our worst performing group) now offers good long-term value. In our opinion, telecom has become a commodity business subject to boom and bust cycles. The boom came in the late 1990s with new competition creating a glut in capacity. The bust followed, leading to a major shakeout in the industry over the past two years. We think the survivors will prosper in what, despite all its recent problems, is still a long-term growth industry. Looking ahead, we have some concerns about the economy. Surprisingly, GDP growth for fourth-quarter calendar 2001 was modestly positive, and it looks like we could see some very impressive GDP numbers in the first two quarters of 2002 as depleted inventories are restocked. However, with the consumer having spent freely throughout the short-lived recession, we don't see the kind of pent-up consumer demand that usually propels strong economic recoveries. If consumer demand disappoints, the economy is not likely to get a leg up from increased capital spending, because corporate managers usually wait for solid evidence of improving end demand before they invest more money in their own businesses. We aren't in the "double dip" recession camp. However, we doubt the economy will be able to sustain growth at the rates we may see in the next two quarters. Consistent with our concern about the economy, we have taken some profits in cyclical stocks that have performed quite well in anticipation of a strong economic recovery, and we have rebuilt positions in industries that historically have been less economically sensitive, such as healthcare, in which we think earnings growth can be sustained even if the economy loses momentum. As always, we are searching our research universe for misunderstood or unloved companies whose business prospects are much better than valuations reflect. Sincerely, /s/ Kevin Risen /s/ Rick White KEVIN RISEN AND RICK WHITE PORTFOLIO CO-MANAGERS 13 International Fund Portfolio Commentary International equities, as represented by our MSCI EAFE Index benchmark, remained weak in the first half of fiscal 2002. Our emphasis on quality companies with historically reliable profit margins and consistent earnings helped us modestly outperform our benchmark. The Fund's overweighting in Ireland continued to benefit performance. The Irish economy slowed somewhat, with GDP growth falling to around 3-4% from recent years' 8% to 12% growth rates. That's not a bad showing, considering that the U.S. dipped into recession and the Economic Union (E.U.) economies were flat. We continued to favor companies in industries tied directly to the domestic economy, such as banking and construction. Despite the excellent performance of the Irish equities markets over the last several years, valuations still fail to reflect fully what we believe are favorable long-term prospects for leading companies in this robust economy. Our investments in Germany were among our most disappointing, with Techem AG, a meter manufacturer, performing poorly. Fortunately, we were materially underweighted in Japan, where economic reform has stalled and the banking system remains fragile. However, the portfolio still sustained some damage from its Japanese exposure. We will very likely continue to underweight Japan, where the banks may ultimately have to raise capital to cover bad loan write-offs by dumping large equity positions. Our largest change in country allocation was an increase in the U.K. from 12.8% at the beginning of the reporting period to 19.5% at its close. The excellent performance of several of our larger U.K. holdings, most notably Diageo, the world's largest spirits company (Johnny Walker Scotch, Smirnoff Vodka, and Captain Morgan Rum) was partially responsible for the increase in our UK allocation. However, we also opened positions in broadcaster/cable operator BSkyB, Brambles PLC, a transportation logistics company, Pearson, the publishing company, as well as several others. As in the U.S., consumer spending remained strong in the U.K., --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman International Fund /1/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years Life of Fund Investor Class /3b/ 06/15/1994 (6.70%) (3.38%) 2.50% 5.96% Trust Class/ 3b, 5/ 06/29/1998 (7.01%) (3.28%) 2.90% 6.22% EAFE Index /2/ (8.29%) (8.22%) 1.59% 2.99%
The risks involved in seeking capital appreciation from investments primarily in companies based outside the United States are set forth in the prospectus and statement of additional information. Investing in foreign securities involves greater risks than investing in securities of U.S. issuers, including currency fluctuations, interest rates and political conditions. The composition, industries and holdings of the Fund are subject to change. In an attempt to reduce overall volatility, Neuberger Berman Management Inc. diversifies the portfolio holdings over a wide array of countries and individual stocks. Please see Endnotes for additional information. 14 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) particularly in the housing sector. The Pound Sterling has remained strong. Perhaps most importantly, we think the U.K. economy is closely linked to the U.S. and should ride the coattails of the American economic recovery. We are still somewhat underweighted in the U.K. versus our benchmark, primarily because we believe the equities market is somewhat richly valued for an economy still dominated by slower-growth businesses. E.U. stock markets are much more reasonably valued. In fact, on average they are trading at about a 30% valuation discount to U.S. stocks -- a substantial spread. The E.U.'s economic problems are well documented: a central bank reluctant to cut short-term interest rates, too much government involvement in the economy, and the weak Euro. However, European corporate culture is slowly changing for the better, following the U.S.'s example of disposing of non-productive assets, and freeing capital to seek higher rates of return. Having more than fully justified its inflation-fighting credentials, we think the central bank is ready to be more accommodating in the year ahead. E.U. governments are promoting some enlightened reforms, especially in privatizing pension systems. We believe the Euro is poised to strengthen against the dollar. In short, we think European equity valuations should trend higher in the years ahead. We are focusing on E.U. companies with strong secular (rather than cyclical) growth prospects. Germany's AWD Holdings and Italy's ENI are two examples. AWD is a life insurance company that we think is well positioned to benefit from the privatization of the country's pension system over the next five years. ENI is an oil company with high quality assets, improved management and excellent growth prospects. Yet, ENI is trading at a substantial price/earnings discount to its U.S. and international peers. We also continue to favor Australia and Canada, which have benefited from their exposure to appreciating natural resource prices. Our holdings are concentrated in the oil sector, as well as financial and healthcare services, which should benefit indirectly from increased economic activity. In closing, international stock markets were hurt by the same events that restrained U.S. equities --terrorism and general global economic uncertainty. We expect the world to recover its political and economic equilibrium in the year ahead and we believe that international equity investors will be rewarded. Sincerely, /s/ Valerie Chang /s/ Benjamin Segal VALERIE CHANG AND BENJAMIN SEGAL PORTFOLIO CO-MANAGERS 15 Manhattan Fund Portfolio Commentary Despite better-than-expected economic news following the September 11 tragedy -- a mild recession and what appears to be a swift economic recovery -- the stock market made little progress in the first half of fiscal 2002. Growth stocks remained under pressure -- partly a hangover from 18 months of terrible performance, but also a reflection of investors' lack of confidence in an economic and earnings turnaround. Recently released economic data, indicating that the economy is on the mend and that earnings are on the road to recovery, should improve investor psychology. "Easy" earnings comparisons in the quarters ahead should also help growth stocks regain some momentum. Technology continued to spell trouble for growth-stock investors and the Manhattan portfolio. Over the six-month reporting period, our weighting in technology was roughly equal to that of the Russell Midcap Growth Index benchmark, but overall, our tech holdings underperformed. Peregrine Systems, Sanmina SCI Corp., and Citrix Systems were among our worst performers. While our bias to ward more economically sensitive tech stocks did not work in our favor in this reporting period, we believe it will benefit shareholders if the economy and tech company earnings regain momentum in the second half of calendar 2002. It's worth mentioning that in January and most of February of this reporting period, economically sensitive tech sub-sectors such as semiconductors, personal computers, and software performed quite well, in our opinion an indication that investors are starting to anticipate better earnings in the quarters ahead. Communications technology will likely remain the weakest of the tech sub-sectors. Consequently, we continue to have very limited exposure in the area. In general, our healthcare holdings also disappointed, with biotechnology stocks including Human Genome Sciences among our worst performers over the last six months. We continue to believe that over the longer term, biotechnology will be a spectacular growth industry. As always, we will be focusing on biotech companies with the most visible growth prospects. --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Manhattan Fund /1, 9/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years 10 Years Investor Class 03/01/1979 /4/ (9.12%) (4.44%) 5.80% 9.69% Trust Class /3a, 5/ 08/30/1993 (9.05%) (4.50%) 5.54% 9.56% Advisor Class /3b, 6/ 09/03/1996 (9.26%) (4.82%) 5.11% 9.29% Russell Midcap Growth Index /2/ (3.20%) 4.70% 9.44% 11.25% S&P 500 Index /2/ (1.67%) 0.24% 10.17% 13.25%
The risks involved in seeking capital appreciation from investments primarily in companies with mid-market capitalization are set forth in the prospectus and statement of additional information. The composition, industries and holdings of the Fund are subject to change. Millennium Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 16 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Energy was our best performing group, with Weatherford International and XTO Energy Corp. making our top-ten list. Our industrial holdings produced good returns, with companies such as L-3 Communications (a defense company specializing in security devices) and Apollo Group finishing near the top of our performance chart. Consumer discretionary stocks also contributed: Radio broadcaster Westwood One was our second-best performer. As the saying goes, the darkest hour is just before dawn. Today, we are more bullish on growth stocks than we have been since we took over management of the Manhattan portfolio more than four years ago. The economy appears to have emerged from recession. In fact, recently released economic data has been so encouraging that Federal Reserve Chairman Alan Greenspan was uncharacteristically upbeat in his most recent Congressional testimony. This probably signals the end of the long series of Fed rate cuts that helped stabilize the economy. However, we believe that interest rates will remain low enough to sustain consumer spending and stimulate business investment. Because of aggressive cost cutting and improved productivity during the downturn, top-line growth should be magnified on the bottom line of well-run companies. The fact that we are entering a year-long period of what we expect will be very easy quarterly comparisons to last year's poor earnings should also improve the mood of investors. Finally, "the Pendulum Effect" -- the tendency of Wall Street analysts to overestimate earnings when the economy is contracting and underestimate earnings when it is expanding -- should work in our favor. Last year, we witnessed a record number of earnings disappointments and paid a very dear price for owning any company that failed to meet Wall Street expectations. Even companies that "hit their numbers" were treated harshly if they were in out-of-favor industries. In the year ahead, we anticipate a lot more pleasant earnings surprises than disappointments. Put in other words, better earnings growth, combined with a higher percentage of companies beating consensus-earnings estimates, would translate into significantly better portfolio performance. In closing, the last 18 months have been trying times for growth stock investors in general, and particularly difficult for investors such as ourselves who favor stocks with well-above-market-average earnings growth potential. Companies with the best earnings growth potential are like the little girl in the story book -- when they are good they are very, very good, and when they are bad they are dreadful. After five years of very good behavior and 18 months of dreadful performance, we believe our favorite type of growth stocks will be particularly rewarding in the years ahead. Sincerely, /s/ Jennifer Silver /s/ Brooke A. Cobb JENNIFER SILVER AND BROOKE A. COBB PORTFOLIO CO-MANAGERS 17 Millennium Fund Portfolio Commentary Although the Russell 2000 Index continued to outperform large-cap indices in the first half of fiscal 2002, small-cap growth stocks lagged their value counterparts by a significant margin. This should come as no surprise. Value generally outperforms growth when the economy is contracting. With the economy now in the early stages of what we believe will be a sustained recovery, we expect small-cap growth stocks to attract more favorable attention. Our consumer discretionary investments, most notably retailers Christopher & Banks Company and Tuesday Morning Corp., performed exceptionally well. We believe the resilient American consumer, who has already single-handedly lifted the economy out of recession, will continue to take advantage of low interest rates and favorable consumer product pricing. We expect select consumer stocks to continue to perform well. Our holdings in the financial sector, primarily companies focused on property and casualty, such as HCC Insurance and AJ Gallager, also contributed to performance. The P&C insurers were hit hard in the immediate aftermath of the September 11 terrorist attacks. However, when investors realized that insurance rates were going to go up rapidly in response to the threat to life and property posed by terrorism, the group rebounded strongly. Barring more serious terrorist incidents in the U.S., higher insurance rates should translate into better profit margins and earnings for this group. We were underweighted in energy versus the benchmark index, but one of our selections, Cal Dive International, posted a respectable gain. Energy is a cyclical industry and we believe that an economic recovery will have a favorable impact on oil and natural-gas pricing going forward. Although we had limited exposure to telecommunications, our three largest holdings in this category, Ubiquitel, Airgate PCS, and U.S. Unwired, were among the portfolio's worst perform- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Millennium Fund /1/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year Life of Fund Investor Class /3a/ 10/20/1998 (6.56%) 7.25% 22.36% Trust Class /3b, 5/ 11/03/1998 (6.64%) 7.10% 22.23% Russell 2000 Growth Index /2/ (4.56%) 4.95% 6.97% Russell 2000 Index /2/ 0.86% 13.98% 12.55%
The risks involved in seeking capital appreciation from investments primarily in companies with small market capitalization are set forth in the prospectus and statement of additional information. The composition, industries and holdings of the Fund are subject to change. Millennium Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 18 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) ers. All three companies are independent cellular services providers tied into Sprint PCS's national network. Small-cap cellular stocks performed poorly, in part due to disappointing near-term subscriber growth, but more because of concern over their financial staying power in an environment in which the capital markets have not been generous to telecom. While we have eliminated U.S. Unwired from the portfolio, we believe Ubiquitel and Airgate PCS have the financial strength to make it through this period of slower-than-anticipated subscriber growth and are well positioned to prosper if the demand for new cellular services with Internet capabilities accelerates in the years ahead. In general, our healthcare investments also disappointed. We had a few earnings casualties in the healthcare category, but in general, the group simply weakened as investors began rotating out of defensive sectors and into more economically sensitive industries in anticipation of an economic recovery. The rest of our losing holdings consist of an eclectic group of small companies from various industries that, for a variety of reasons, disappointed on the earnings front. Most have been liquidated, but we have maintained positions in those companies whose longer-term fundamentals still appear to us quite compelling. Although we are stock pickers rather than economists or market forecasters, we believe we will see a two-stage economic recovery, with the consumer continuing to carry most of the burden initially and capital spending accelerating in the second half of calendar 2002. Typically, small-cap growth stocks outperform as the economy comes out of recession, primarily because investors start focusing less on safety and more on companies with better earnings-growth potential. We believe investors will be selective this time around, favoring small growth companies with earnings visibility over more speculative issues. Currently, we see great opportunity in the semiconductor industry. In fact, Artisan Components, a broadly diversified semiconductor design firm, is the Fund's largest holding at the end of this period. Formerly bloated semiconductor inventories have been reduced considerably. Demand has ticked up, and we expect it to accelerate with capital spending in the second half of the year. Artisan has a great track record as a chip designer and as its new designs go into production, we look for the company's royalty income to grow nicely. Artisan Components was the portfolio's best performer in this six-month reporting period. We think it can continue to perform well in the year ahead. In closing, small-cap growth stock investing hasn't been rewarding over the last two years. Most investors have paid dearly as speculative excesses, especially in the technology sector, were wrung out of the market. However, bear markets don't discredit time-tested investment disciplines. We think the near-term outlook for small-cap growth stocks has improved considerably in recent months and we believe that our disciplined approach to the small-cap growth stock market will reward shareholders in the years ahead. Sincerely, /s/ Michael Malouf /s/ Richard J. Jodka MICHAEL MALOUF AND RICHARD J. JODKA PORTFOLIO CO-MANAGERS 19 Partners Fund Portfolio Commentary In the first half of 2002, Partners Fund posted a modest gain, compared to small losses for its benchmark indices. Opportunistic stock picking, focused on quality companies with strong balance sheets, real earnings and high returns on equity helped the Fund deliver a positive return in this challenging investment environment. Our investments in the consumer discretionary sector made the greatest contribution to performance. Starwood Hotel & Resorts was one of our biggest winners. Starwood was hammered following the tragic events of September 11, when investors indiscriminately dumped travel and lodging stocks. Believing the industry would recover quickly, we bought Starwood near the bottom and were rewarded with an almost 70% return on our investment. We believe this industry leader is still reasonably valued based on our forward earnings forecasts. Intimate Brands (which owns Victoria's Secret) is another consumer discretionary investment worth noting for excellent performance. Its big gain was triggered by a recovery in operating profit margins for Victoria's Secret and better same store sales. Recently, parent company The Limited bought back the 16% of Intimate Brands it didn't already own. We think it's a good deal for shareholders who, in effect, will continue to own this terrific company through The Limited stock for which it's being tendered. Although categorized as an industrial stock, another of our top performers, Sabre Holdings, has actually been a play on the recovery of the travel industry. Sabre owns and operates the leading airline reservations system and is paid on the basis of airline segments flown. With airlines reservations down 75% in the week following the terrorist attacks, Sabre's earnings run rate declined sharply and the stock was almost halved before we started accumulating it. We thought Americans would take to the skies again, but we didn't want to buy the airlines because they were too debt-heavy and we couldn't predict how the troubling issue of airlines insurance would be re- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Partners Fund /1,9/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years 10 Years Investor Class 01/20/1975/4/ 0.55% 6.54% 7.82% 12.57% Trust Class /3a, 5/ 08/30/1993 0.46% 6.34% 7.69% 12.49% Advisor Class /3a, 6/ 08/16/1996 0.38% 6.09% 7.25% 12.24% Russell 1000 Value Index /2/ (0.79%) 4.39% 11.46% 14.49% S&P 500 Index /2/ (1.67%) 0.24% 10.17% 13.25%
The composition, industries and holdings of the Fund are subject to change. Millennium Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 20 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) solved. Debt-free Sabre appeared to be a much safer alternative. Airline travel has since recovered and on a year-to-year basis, bookings are now only off about 15%; they are expected to be down to just 8% on a year-to-year basis at the end of calendar 2002. We are forecasting $1.90 per share in earnings for Sabre Holdings and even after its dramatic run-up, the stock trades at what we view as a reasonable valuation. On the whole, our information technology investments prospered, posting a respectable gain compared to losses for the tech components of the S&P 500 and Russell 1000 Value indices. Our success in tech was the result of owning companies with real earnings and improving internal dynamics. Computer Sciences, the portfolio's second-best performing stock, is a good example. Computer Sciences is an information technology services firm with approximately half its revenues coming from the private sector and half from federal contracts, including military and national security agencies. The stock was cheap because, in the midst of the information technology spending drought, operating margins had declined from about 7% to just 2%. Margins have lately been recovering thanks largely to the company's cost reduction program. Going forward, we expect the federal government's need to more effectively share data among agencies in the wake of the 9/11 tragedy to be a strong positive for Computer Sciences. Utilities and telecom were our worst performing sectors. We were significantly underweighted in telecom because we think the high level of debt in the industry will continue to present problems. However, despite our minimal weighting, telecom still had a negative impact on portfolio performance. We have thrown in the towel on utilities, which also hurt the portfolio. This is not in response to the Enron accounting scandal, but rather due to deteriorating fundamentals in the power gen eration/energy trading business. We eliminated our positions in Dynegy and El Paso due to concern that the high debt of these companies may impair their ability to trade long-term energy contracts. In closing, we believe what is now a consumer-driven economic recovery will get a boost from a rebound in capital spending in the second half of calendar 2002 and that the stock market can continue to make some progress. However, we think disciplined stock picking will continue to be the primary determinant of investment success in the year ahead. Sincerely, /s/ S. Basu Mullick S. BASU MULLICK PORTFOLIO MANAGER 21 Regency Fund Portfolio Commentary Although Regency Fund modestly underperformed its Russell Midcap Value Index benchmark in the first half of fiscal 2002, we are pleased to have delivered positive returns in what continued to be a difficult market. Looking ahead, we believe value investing will continue to excel as the economy limps out of recession and corporate profit growth remains restrained. Consumer discretionary investments such as lottery machine leader GTECH Holdings, auto seat manufacturer Lear Corp., hotel company Starwood Hotels & Resorts, and Tricon Global Restaurants were among our best performers. Lear benefited from strong auto sales, driven by zero-percent financing and other incentives. We bought Starwood and Sabre Holdings (the major airline reservation system assigned to the industrials sector) following the events of September 11. Our rationale was that, after recovering from the initial shock caused by the terrorist attacks, Americans would begin traveling again; in addition, the stocks of these high-quality companies had become out standing fundamental bargains. Tricon Global Restaurants continued to benefit from the turnaround of its Taco Bell division, as well as the sale of company-owned outlets to franchisees who are much better at managing the restaurants than the company. Our financial sector investments, most notably reinsurer XL Capital Limited and insurance broker Willis Group Holdings, also performed quite well. Property and casualty insurance rates have increased considerably since the September 11 tragedy. We expect this to boost profit margins and earnings for reinsurers and insurance brokers. We were overweighted in energy and overall, our investments more than doubled the return of the energy component of our benchmark index. It is interesting that recently investors have been bidding up stocks in economically sensitive sectors such as materials and industrials while not showing much enthusiasm for energy stocks. Oil and natural gas prices have fallen precipitously from their --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Regency Fund /1,9/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year Life of Fund Investor Class /3b/ 06/01/1999 2.20% 10.04% 14.47% Trust Class /3b, 5/ 06/10/1999 2.16% 9.95% 14.45% Russell Midcap Value Index /2/ 4.03% 14.45% 7.70% Russell Midcap Index /2/ 1.36% 9.92% 6.06%
The risks involved in seeking capital appreciation from investments primarily in companies with medium market capitalization are set forth in the prospectus and statement of additional information. The composition, industries and holdings of the Fund are subject to change. Regency Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 22 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) peaks. However, this has been the result of weak demand in a recession, rather than significant production increases. We expect that even a modest economic recovery should help energy prices rise from currently depressed levels, inspiring more interest in energy stocks. Our underweighting in the materials sector and overweighting in healthcare were two reasons we modestly underperformed our benchmark index. Materials companies generally don't pass our quality screens, because so few cover their cost of capi- tal over the full economic cycle. They earn good money as the economy expands; demand increases, and capacity becomes constrained. But, during the good times, new competition and capacity come onstream, limiting pricing and profits. Then, when the economy falters, profits evaporate. Traders may be able to make money trading materials stocks. However, we are investors, not traders. Healthcare stocks weakened as investors rotated out of defensive sectors into more economically sensitive industry groups. In our opinion, healthcare fundamentals remain strong. If, as we anticipate, the economic and profit recovery proves more muted than generally expected, healthcare stocks should regain momentum. Our utilities investments also disappointed. We didn't own any of the pure independent power generators that came down with severe cases of "Enronitis," but our investments in Allegheny Energy and American Electric Power slumped badly. We are not economists. However, over the course of the year, we talk to 400 to 500 companies in a wide variety of industries. What we are hearing is not particularly encouraging. The consensus is that the worst is over and business is getting a bit better. But very few companies seem to be expecting the kind of strong demand for their products generally seen when the economy comes out of recession. The American consumer is over-leveraged and continued to spend rather aggressively throughout what has been one of the mildest and shortest-lived recessions in history. So, we don't see consumer-driven demand increasing very substantially over the next year. Most industries are still suffering from overcapacity created in the "Roaring 90s." Consequently, if end demand doesn't improve significantly, we aren't likely to see a capital spending rebound. Our conclusion is that pricing power will remain elusive, and in general, corporate profits are likely to disappoint. Strategically, we continue to be somewhat defensive as evidenced by the portfolio's overweighting in the healthcare sector and its underweighting in materials and more economically sensitive companies in the industrials category. Our stock selection discipline -- seeking out undervalued companies with strong balance sheets, high returns on capital, and consistent earnings --remains unchanged. In closing, value has materially outperformed growth over the last 18 months. If the economy comes roaring back, growth stock investing may gain the upper hand. However, if as we anticipate, the economic recovery is muted and earnings growth disappoints, value investing should continue to be more productive. Sincerely, /s/ Robert Gendelman ROBERT GENDELMAN PORTFOLIO MANAGER 23 Socially Responsive Fund Portfolio Commentary In the first half of fiscal 2002, our value discipline helped us preserve shareholder capital in a volatile market environment. The Socially Responsive portfolio closed the reporting period with a modest gain, versus small losses for the S&P 500 and Russell 1000 Value Index. Generally good economic news (a mild recession and swift recovery) helped the stock market regain much of the ground lost in the weeks following the September 11 tragedy. However, stocks continued to be restrained by uncertainty regarding the strength of the economic and earnings rebound. The latest economic data suggest strongly that the economy is back on solid footing. In his most recent appearance before Congress, Federal Reserve Chairman Alan Greenspan confirmed that the economic outlook had improved considerably. Surprisingly, gross domestic product (GDP) for fourth-quarter 2001 was modestly positive, and, in general, corporate earnings beat expectations for the quarter. But in the first two months of the new year, investors failed to respond with much enthusiasm to a brightening economic outlook. We suspect if the economic and earnings news continue to improve in the quarters ahead, the stock market will gain some momentum. Our technology investments were the biggest contributors to portfolio returns during this reporting period. In the summer of 2001 we saw early evidence that the semiconductor industry was bottoming, but felt the stocks were still somewhat richly valued. When they retreated into value range in the fall, we began accumulating and/or adding to positions in leading semiconductor related companies such as Teradyne, our top performer in the first half, and Lattice Semiconductor, which we believe will be a great performer in the year ahead. We also added to existing positions in dominant companies in other tech sub-sectors, including Dell Computer and Synopsys, both of which made our top-ten performance list. The common thread in our purchases was attractive valuations relative to what we see as improving near-term fundamentals. --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Inception Date Six Month Average Annual Total Socially Responsive Fund /1,9/ Period Ended Return Ended 3/31/02 2/28/2002 1 Year 5 Years Life of Fund Investor Class /3a/ 03/16/1994 0.36% 6.56% 8.93% 11.44% Trust Class/ 3a, 5/ 03/03/1997 0.22% 6.25% 8.73% 11.31% Russell 1000 Value Index /2/ (0.79%) 4.39% 11.46% 13.96% S&P 500 Index /2/ (1.67%) 0.24% 10.17% 13.78%
The composition, industries and holdings of the Fund are subject to change. Socially Responsive Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the Fund's total assets. Please see Endnotes for additional information. 24 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Our energy holdings also performed well. We were modestly overweighted in energy compared to our S&P 500 benchmark, and stocks such as Newfield Exploration posted good gains. Newfield is an exceptionally well-managed company that did a wonderful job preserving profitability by hedging production as energy prices were declining. Newfield is also a good corporate citizen. The company has a great safety record and has taken significant steps to minimize the environmental impact of its exploration and production projects. Our health care investments were also productive, with Johnson & Johnson the star performer over this reporting period. Industrials, financials, and consumer discretionary were our three worst-performing sectors, in each case as a result of disappointing individual stock performance. For instance, in the industrials sector, Tyco, a successful long-term portfolio holding, was hurt both by reverberations from the Enron accounting scandal and management's decision to break the company into four parts. In the financial sector J.P. Morgan Chase declined sharply, due in part to concern about its exposure to Enron and other troubled companies. In the consumer discretionary sector, Gap declined, missing the mark on fashion once again, and reporting disappointing same-store sales. Looking ahead, we feel quite positive about the economy and stock market. We believe we are in the early stages of the inventory rebuilding cycle. Manufacturing activity and business investment has recently been trending up. We think corporate earnings may continue to surprise on the upside as they did in calendar fourth-quarter 2001. If so, this should improve investor psychology considerably. On the margin, the portfolio now has a more cyclical posture, designed to take advantage of better-than-currently-anticipated earnings for companies in more economically sensitive industries. One good example is our recent investment in Canadian National Railroad. Canadian National has an extensive rail system that reaches from the Atlantic to the Pacific and down to the Gulf of Mexico. The company has one of the lowest cost structures in the railroad industry and one of the best operating track records of all rail carriers. We also view the railroads as socially responsive investments, in that they are much friendlier to the environment than trucking. In closing, we are relatively pleased to have once again produced modestly positive returns in a down market. We expect a recovering economy and better corporate earnings in the year ahead to create a more productive investment environment. Regardless of what the market holds for the year ahead, we believe our brand of value investing can continue to deliver satisfactory returns for socially responsive shareholders. Sincerely, /s/ Janet W. Prindle /s/ Arthur Moretti JANET W. PRINDLE AND ARTHUR MORETTI PORTFOLIO CO-MANAGERS 25 Technology Fund Portfolio Commentary The first half of 2002 was an up-and-down period for the technology sector and the Fund. Technology industry fundamentals had been improving modestly prior to the tragic events of September 11, and tech stocks were beginning to show signs of recovery. Then, tech spending was put on the back burner for nearly a month as everyone struggled to assess terrorism's damage to the economy and individual businesses. In November and December, demand for technology products firmed up again, and tech stocks rallied. However, at the beginning of calendar 2002, investors became increasingly skeptical that the nascent recovery was for real, and tech stocks swooned before rebounding in the last week of February. There were a few bright spots in the portfolio. Our healthcare investments, primarily biotech and most notably Imclone, posted gains. Our commitments to data-storage-related stocks such as Emulex, Network Appliance, and Veritas also contributed, as investors focused on the importance of backing up data, following the September 11 tragedy. Al though we have trimmed some positions in storage-related stocks, we think the long-term outlook is still relatively favorable. Our post-9/11 investments in wireless stocks such as Nokia and RF MicroDevices (a Nokia supplier) performed well immediately following the tragedy, as demand for handsets surged temporarily. We closed out these positions before demand flattened again, with consumers postponing purchases to wait for the next generation of cellular products with Internet capabilities to come to market. Our discouragingly long list of losing stocks reflects the poor tone of the tech stock market in general; it includes stocks we either bought too early or which failed to live up to our fundamental expectations. We remain committed to the former and have liquidated the latter. Understandably, in view of the Fund's 82.2% average tech weighting during the six months versus the 28.8% information technology component of the Russell 1000 Growth Index, we under- --------------------------------------------------------------------------------
PERFORMANCE HIGHLIGHTS Neuberger Berman Technology Fund /1/ Inception Date Six Month Average Annual Total Period Ended Return Ended 3/31/02 2/28/2002 1 Year Life of Fund Investor Class /3b/ 05/01/2000 (15.51%) (14.79%) (42.95%) Russell 1000 Growth Index /2/ (2.41%) (2.00%) (24.09%) S&P 500 Index /2/ (1.67%) 0.24% (10.43%)
The risks involved in seeking capital appreciation from investments primarily in technology-related companies and/or with small market capitalization are set forth in the prospectus and statement of additional information. The composition, industries and holdings of the Portfolio are subject to change. Technology Fund is invested in a wide array of stocks and no single holding makes up more than a small fraction of the fund's total assets. Please see Endnotes for additional information. 26 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) performed our benchmark by a wide margin. However, we also underperformed most purer technology indices. This was largely a result of our decision in early November to significantly overweight semiconductors and software, the two most economically sensitive tech sub-sectors. We believe our investment rationale was correct, but our timing was poor. It hurt us badly in the January/early February period, when investors began to question whether the economic recovery was for real and began worrying about the potential for a "double dip" recession. Economic data released near the end of February eased investors' concerns, and semiconductor and software stocks took off --unfortunately too late to have much of a favorable impact on first-half 2002 returns. Interestingly, if this six-month reporting period were to be stretched out to include the first two weeks of March, performance would be considerably better. Why did we overweight semiconductors and software? Historically, semiconductor stocks outperform in the early stages of an economic recovery. The semiconductor industry has become very adept at lowering cost structures during periods of weak demand. So, when demand improves, these companies generally enjoy a huge expansion in profit margins and a surge in earnings. We believe quality semiconductor stocks will post impressive earnings gains over the next year. Our commitment to software stocks resulted from our talks with corporate information technology (IT) officers regarding their top priorities. The overwhelming majority wanted to do more with less. In other words, they wanted to maximize the efficiency of existing systems through relatively inexpensive and cost-effective software upgrades, rather than buy new systems. Now that the economic dust has settled somewhat, we expect IT officers to follow through with these plans, providing a nice boost to software company earnings. At the end of this reporting period, semiconductor-related stocks comprised 37.6% of portfolio assets and software stocks, 36.2%. This compares to a 31.6% weighting in semiconductors and a 32.8% weighting in software for the technology-only component of the Russell 1000 Growth Index. If these stocks' recent performance is any indication, these overweightings should work to our advantage on an absolute and relative basis going forward. Sincerely, /s/ Jennifer Silver JENNIFER SILVER INVESTMENT TEAM LEADER 27 Endnotes 1. ''Total Return'' includes reinvestment of all income dividends and capital gain distributions. Results represent past performance and do not indicate future results. The value of an investment in the Fund and the return on the investment both will fluctuate, and redemption proceeds may be higher or lower than an investor's original cost. 2. Please see "Glossary of Indices" on page 29 for a description of indices. Please note that indices do not take into account any fees and expenses of investing in the individual securities that they track, and that individuals cannot invest directly in any index. Data about the performance of these indices are prepared or obtained by Management and include reinvestment of all dividends and capital gain distributions. The Portfolio may invest in many securities not included in the above-described indices. 3. Expense Caps or Waivers: Absent these arrangements, which are subject to change, the total returns for these periods would have been less. Please see the notes to the financial statements for specific information regarding which funds and which classes currently have a portion of their operating expenses absorbed by NBMI. a. Neuberger Berman Management Inc. previously absorbed or waived certain operating expenses. b. NBMI currently absorbs certain operating expenses. 4. These dates reflect when NBMI first became investment adviser to these Funds. 5. Performance prior to August 1993 for the Trust Class of Focus, Genesis, Guardian, Manhattan and Partners Funds (prior to March 1997 for Socially Responsive Fund; June 1998 for International Fund; November 1998 for Millennium Fund; June 1999 for Regency Fund) is of the Investor Class, which has lower expenses and typically higher returns than the Trust Class. 6. Performance prior to September 1996 for the Advisor Class of Focus, Guardian and Manhattan Funds (prior to August 1996 for Partners Fund; April 1997 for Genesis Fund) is of the Investor Class, which has lower expenses and typically higher returns than the Advisor Class. Please see the notes to the financial statements for specific information regarding which funds currently have a portion of their operating expenses absorbed by NBMI. 7. Neuberger Berman Management Inc. first became investment advisor of the Fasciano Fund after the close of business on 3/23/2001. 8. Performance prior to July 1999 for the Institutional Class of Genesis Fund is that of the Investor Class, which has higher expenses and typically lower returns than the Institutional Class. Also, NBMI caps the Institutional Class expenses. Absent this arrangement, returns would be lower. 9. The investments for the Fund are managed by the same portfolio manager(s) who manage one or more other mutual funds that have similar names, investment objectives, and investment styles as the Fund. You should be aware that the Fund is likely to differ from the other mutual funds in size, cash flow pattern and tax matters. Accordingly, the holdings and performance can be expected to vary from those of the other mutual funds. 10. As of April 2, 2001, the fund changed its investment policy to become "non-diversified" under the Investment Company Act of 1940. As a result, the fund can invest a greater percentage of assets in any single security. This practice could increase the risk of investing in the fund because it may own fewer securities. The Fund's name prior to January 1, 1995, was Neuberger&Berman Selected Sectors Fund. Prior to November 1, 1991, the investment policies of Neuberger Berman Focus Fund required that a substantial percentage of its assets be invested in the energy field; accordingly, performance results prior to that time do not necessarily reflect the level of performance that may be expected under the Fund's current investment policies. While the Fund's value-oriented approach is intended to limit risks, the Portfolio, with its concentration in sectors, may be more affected by any single economic, political or regulatory development than a more diversified mutual fund. For more complete information on any of the Neuberger Berman Equity Funds, call Neuberger Berman Management Inc. at (800) 877-9700, or visit our website at www.nb.com. 28 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Glossary of Indices S&P 500 Index: The S&P 500 Index is widely regarded as the standard for measuring large-cap U.S. stock markets' performance and includes a representative sample of leading companies in leading industries. Russell 1000(R) Index: Measures the performance of the 1,000 largest companies in the Russell 3000(R) Index (which measures the performance of the 3,000 largest U.S. companies based on total market capitalization). The Russell 1000 Index represents approximately 92% of the total market capitalization of the Russell 3000 Index. Russell 1000(R) Value Index: Measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Russell 1000(R) Growth Index: Measures the performance of the Russell 1000(R) companies with higher price-to-book ratios and higher forecasted growth values. Russell 2000(R) Index: An unmanaged index consisting of securities of the 2,000 issuers having the smallest capitalization in the Russell 3000(R) Index, representing approximately 8% of the Russell 3000 total market capitalization. The smallest company's market capitalization is roughly $147 million. Russell 2000(R) Growth Index: Measures the performance of those Russell 2000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. Russell 2000(R) Value Index: Measures the performance of those Russell 2000(R) Index companies with lower price-to-book ratios and lower forecasted growth values. EAFE(R) Index: Also known as the Morgan Stanley Capital International Europe, Australasia, Far East Index. An unmanaged index of over 1,000 foreign stock prices. The index is translated into U.S. dollars and includes reinvestment of all dividends and capital gain distributions. Russell Midcap(R) Index: Measures the 800 smallest companies in the Russell 1000 Index. Russell Midcap(R) Growth Index: An unmanaged index that measures the performance of those Russell Midcap(R) Index (the 800 smallest companies in the Russell 1000 Index) companies with higher price-to-book ratios and higher forecasted growth values. Russell Midcap(R) Value Index: An unmanaged index that measures the performance of those Russell Midcap(R) Index (the 800 smallest companies in the Russell 1000 Index) companies with lower price-to-book ratios and lower forecasted growth values.
Please note that indices do not take into account any fees and expenses of the individual securities that they track and that individuals cannot invest directly in any index. Data about the performance of these indices are prepared or obtained by Neuberger Berman Management Inc. and include reinvestment of all dividends and capital gain distributions. The Funds may invest in securities not included in the above-described indices. 29 Schedule of Investments Century Fund Top Ten Equity Holdings
Holding % 1 Pfizer Inc. 4.3 2 General Electric 3.9 3 Microsoft Corp. 3.7 4 Intel Corp. 3.3 5 Johnson & Johnson 3.3 6 IBM 3.2 7 Target Corp. 2.4 8 Citigroup Inc. 2.2 9 Taiwan Semiconductor Manufacturing ADR 2.2 10 Texas Instruments 2.1
Number of Shares Market Value/+/ (000's omitted) Common Stocks (96.5%) Biotechnology (1.4%) 3,500 IDEC Pharmaceuticals $ 220* Business Services (0.8%) 2,200 FedEx Corp. 127* Business Services--IT Business Services (5.0%) 4,000 Affiliated Computer Services 196* 8,200 Concord EFS 246* 10,400 SunGard Data Systems 321* -------- 763 Capital Equipment (3.9%) 15,600 General Electric 601 Communications Equipment (2.8%) 15,800 Cisco Systems 225*/(S)/ 1,900 L-3 Communications Holdings 209* -------- 434 Computer Related (0.9%) 15,900 Sun Microsystems 135* Consumer Cyclical--Leisure & Consumer Services (1.9%) 4,375 International Game Technology 295* Consumer Products & Services (1.0%) 5,600 Masco Corp. 157 Energy (0.8%) 3,200 El Paso Corp. 125 Financial Services (8.1%) 3,200 American International Group 237 7,500 Citigroup Inc. 339 4,500 Freddie Mac 287 3,400 Household International 175 3,100 Lehman Brothers Holdings 175 1,200 Prudential Financial 37* -------- 1,250 Food & Beverage (5.3%) 4,200 Anheuser-Busch 214 7,200 Kraft Foods 281 6,200 PepsiCo, Inc. 313 -------- 808 Hardware (3.2%) 5,000 IBM 491 Health Care (24.3%) 4,500 Abbott Laboratories 254 2,800 AmerisourceBergen Corp. 190 5,200 Amgen Inc. 301*
Number of Shares Market Value/+/ (000's omitted) 2,500 Eli Lilly $ 189 5,700 Express Scripts 295* 3,200 Forest Laboratories 254* 3,700 Genentech, Inc. 175* 2,700 Guidant Corp. 115* 8,354 Johnson & Johnson 509/(S)/ 1,100 Laboratory Corp. of America Holdings 90* 16,225 Pfizer Inc. 665 5,700 Pharmacia Corp. 234 2,000 Quest Diagnostics 142* 4,900 Wyeth 311 -------- 3,724 Insurance (1.1%) 1,700 XL Capital 162 Internet (1.3%) 3,875 eBay Inc. 202* Media (1.8%) 6,000 Viacom Inc. Class B 279* Oil & Gas (1.1%) 4,600 Talisman Energy 174 Retail (8.8%) 3,700 Best Buy 250* 6,600 Costco Wholesale 272* 5,900 Home Depot 295 8,800 Target Corp. 369 4,100 Walgreen Co. 165 -------- 1,351 Semiconductors (9.0%) 18,000 Intel Corp. 514/(S)/ 7,675 Intersil Corp. 210* 20,500 Taiwan Semiconductor Manufacturing ADR 333/(S)/ 11,000 Texas Instruments 323 -------- 1,380 Software (8.5%) 7,200 Mercury Interactive 244* 9,800 Microsoft Corp. 572* 10,200 Siebel Systems 283* 5,700 VERITAS Software 202* -------- 1,301 Systems & Components (1.4%) 8,800 Dell Computer 217* Technology (1.7%) 7,300 Cadence Design Systems 154* 2,150 NVIDIA Corp. 110* -------- 264
30 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Century Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Telecommunications (1.3%) 5,400 Cox Communications $ 199* Transportation (1.1%) 7,800 Southwest Airlines 165 Total Common Stocks (Cost $14,585) 14,824 -------- Principal Amount Short-Term Investments (13.8%) $1,653,615 N&B Securities Lending Quality Fund, LLC 1,654 460,081 Neuberger Berman Institutional Cash Fund Trust Class 460/@/ -------- Total Short-Term Investments (Cost $2,114) 2,114/#/ -------- Total Investments (110.3%) (Cost $16,699) 16,938/##/ Liabilities, less cash, receivables and other assets [(10.3%)] (1,582) -------- Total Net Assets (100.0%) $ 15,356 --------
See Notes to Schedule of Investments 31 Schedule of Investments Fasciano Fund Top Ten Equity Holdings
Holding % 1 Emmis Communications 3.7 2 G & K Services 3.5 3 DENTSPLY International 3.3 4 Snap-on 3.2 5 International Speedway 3.2 6 Zebra Technologies 3.2 7 Manitowoc Co. 3.1 8 Pulitzer Inc. 2.9 9 HCC Insurance Holdings 2.7 10 Meredith Corp. 2.7
Number of Shares Market Value/+/ (000's omitted) Common Stocks (94.8%) Business Services (3.8%) 25,000 Administaff, Inc. $ 600* 212,400 G & K Services 7,508 --------- 8,108 Commercial Services (4.2%) 30,000 FirstService Corp. 680* 100,000 Modine Manufacturing 2,699 83,700 OM Group 5,591 --------- 8,970 Communications (18.3%) 120,000 Ackerley Group 2,010* 297,600 Emmis Communications 7,982* 150,000 Hearst-Argyle Television 3,098* 250,000 Journal Register 4,850* 100,000 Lee Enterprises 3,585 100,000 McClatchy Newspapers 5,500 146,500 Meredith Corp. 5,781 244,300 Penton Media 1,845/(S)/ 121,200 Westwood One 4,335* --------- 38,986 Consumer Products & Services (14.9%) 150,000 Blyth Industries 3,206 200,000 Central Parking 4,320/(S)/ 150,000 Plantronics, Inc. 3,000* 100,000 ShopKo Stores 1,410* 200,300 Snap-on 6,900 130,000 Spartech Corp. 2,782 400,000 Steak n Shake 5,752* 100,000 Tootsie Roll Industries 4,435 --------- 31,805 Distributor (3.1%) 20,000 D & K Healthcare Resources 1,081 200,000 MSC Industrial Direct 4,218*/(S)/ 25,000 ScanSource, Inc. 1,325* --------- 6,624 Entertainment (3.2%) 155,500 International Speedway 6,833 Financial Services (10.5%) 95,000 American Capital Strategies 2,719 42,100 Corus Bankshares 2,036 70,125 First Midwest Bancorp 2,009 17,100 GBC Bancorp 560 205,500 HCC Insurance Holdings 5,791 75,000 ITLA Capital 1,739* 100,000 Metris Cos. 1,628/(S)/ 30,000 Strayer Education 1,439/(S)/
Number of Shares Market Value/+/ (000's omitted) 30,000 W.P. Stewart & Co. $ 813 100,000 Waddell & Reed Financial 3,081 20,000 Wintrust Financial 651 --------- 22,466 Health Care (0.5%) 50,000 Apria Healthcare Group 1,080* Health Products & Services (15.9%) 213,450 DENTSPLY International 7,080 320,000 Hooper Holmes 2,877 180,500 K-V Pharmaceutical 4,558* 100,000 Landauer, Inc. 3,720 114,300 Patterson Dental 4,637* 130,000 SRI/Surgical Express 2,080* 200,000 STERIS Corp. 4,104* 170,000 Young Innovations 4,802* --------- 33,858 Industrial Goods & Services (0.3%) 24,000 Insituform Technologies 593* Insurance (0.3%) 20,000 United Fire & Casualty 603 Machinery & Equipment (7.8%) 15,000 Graco Inc. 616 100,000 IDEX Corp. 3,580 84,200 Kaydon Corp. 2,103 182,900 Manitowoc Co. 6,621 80,000 Regal-Beloit 1,784 50,000 Robbins & Myers 1,240/(S)/ 40,500 Stewart & Stevenson Services 629 --------- 16,573 Oil & Gas (0.2%) 20,100 Prima Energy 437*/(S)/ Publishing & Broadcasting (2.9%) 122,300 Pulitzer Inc. 6,236 Technology (4.4%) 50,000 Littelfuse, Inc. 1,185* 62,700 Merix Corp. 1,019*/(S)/ 60,000 Methode Electronics Class A 543 131,700 Zebra Technologies 6,781* --------- 9,528 Telecommunications (0.3%) 40,000 Andrew Corp. 672* Transportation (3.0%) 97,400 C.H. Robinson Worldwide 2,834 150,000 EGL, Inc. 1,601*/(S)/ 100,000 Midwest Express Holdings 1,892* --------- 6,327
32 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Fasciano Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Waste Management (1.2%) 40,000 Stericycle, Inc. $ 2,580* Total Common Stocks (Cost $156,239) 202,279 --------- Principal Amount Short-Term Investments (7.9%) $8,953,270 N&B Securities Lending Quality Fund, LLC 8,953 7,955,372 Neuberger Berman Institutional Cash Fund Trust Class 7,955/@/ --------- Total Short-Term Investments (Cost $16,908) 16,908/#/ --------- Total Investments (102.7%) (Cost $173,147) 219,187/##/ Liabilities, less cash, receivables and other assets [(2.7%)] (5,774) --------- Total Net Assets (100.0%) $ 213,413 ---------
See Notes to Schedule of Investments 33 Schedule of Investments Focus Fund Top Ten Equity Holdings
Holding % 1 Citigroup Inc. 10.4 2 Capital One 10.3 Financial 3 Furniture Brands 7.4 International 4 Tech Data 6.9 5 International 5.7 Rectifier 6 J.P. Morgan 5.6 Chase 7 FleetBoston 5.4 Financial 8 Morgan Stanley 5.2 Dean Witter 9 TJX Cos. 4.6 10 Amkor 4.3 Technology
Number of Shares Market Value/+/ (000's omitted) Common Stocks (99.3%) Financial Services (48.8%) 3,865,000 Capital One Financial $ 190,428 4,244,500 Citigroup Inc. 192,064 3,015,000 FleetBoston Financial 100,641 3,547,700 J.P. Morgan Chase 103,770 620,000 Lehman Brothers Holdings 35,030 1,640,000 Merrill Lynch 78,638 1,950,000 Morgan Stanley Dean Witter 95,784 1,572,500 Nationwide Financial Services 63,655/++/ 1,980,000 Stilwell Financial 45,164 ----------- 905,174 Retail (18.9%) 780,000 American Eagle Outfitters 19,476* 3,615,000 Furniture Brands International 137,912*/++/ 951,000 Jones Apparel Group 33,913* 749,600 Neiman Marcus Group Class B 24,362* 1,340,000 Pacific Sunwear of California 32,857*/++/ 2,265,000 TJX Cos. 86,002 1,303,500 Tommy Hilfiger 17,089* ----------- 351,611 Technology (31.6%) 425,000 Amdocs Ltd. 12,006* 5,680,000 Amkor Technology 78,838*/(S)/ 2,275,000 Celestica Inc. 74,848* 2,250,000 Flextronics International 32,265* 2,858,300 International Rectifier 104,957*/(S)/ 2,490,000 Jabil Circuit 46,439* 4,045,000 Rational Software 75,075* 4,045,000 Solectron Corp. 33,452* 2,795,000 Tech Data 128,011*/++/ ----------- 585,891 Total Common Stocks (Cost $1,439,047) 1,842,676 -----------
Principal Amount Market Value/+/ (000's omitted) Short-Term Investments (2.8%) $43,751,245 N&B Securities Lending Quality Fund, LLC $ 43,751 7,787,010 Neuberger Berman Institutional Cash Fund Trust Class 7,787/@/ ---------- Total Short-Term Investments (Cost $51,538) 51,538/#/ ---------- Total Investments (102.1%) (Cost $1,490,585) 1,894,214/##/ Liabilities, less cash, receivables and other assets [(2.1%)] (39,622) ---------- Total Net Assets (100.0%) $1,854,592 ----------
34 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Genesis Fund Top Ten Equity Holdings
Holding % 1 AptarGroup Inc. 2.9 2 Church & Dwight 1.9 3 DENTSPLY International 1.8 4 Zebra Technologies 1.7 5 Alberto-Culver Class A 1.7 6 Patterson Dental 1.7 7 Mentor Corp. 1.7 8 Fair, Isaac & Co. 1.7 9 CEC Entertainment 1.6 10 Trigon Healthcare 1.5
Number of Shares Market Value/+/ (000's omitted) Common Stocks (94.6%) Aerospace (0.1%) 248,750 Ducommun Inc. $ 3,458* Automotive (1.4%) 979,100 Donaldson Co. 35,394 568,700 Gentex Corp. 17,266* ----------- 52,660 Banking & Financial (10.2%) 1,674,000 Astoria Financial 49,902 2,098,400 Banknorth Group 52,439 1,254,200 Colonial BancGroup 17,898 1,205,900 Cullen/Frost Bankers 41,543 611,400 East West Bancorp 17,700 693,400 M&T Bank 53,045 1,684,015 New York Community Bancorp 49,409 557,100 OceanFirst Financial 15,086/++//(S)/ 125,000 Pacific Century Financial 3,165 1,547,962 Sterling Bancshares 20,572 392,345 Texas Regional Bancshares 15,490/(S)/ 1,093,800 Webster Financial 38,349 299,100 Westamerica Bancorp. 12,302 ----------- 386,900 Building, Construction & Furnishing (2.7%) 515,500 ABM Industries 16,857 612,900 EMCOR Group 32,355*/(S)/ 423,300 Lincoln Electric Holdings 10,993 760,900 Simpson Manufacturing 41,089*/++/ ----------- 101,294 Business Services (1.4%) 1,006,200 Harte-Hanks 30,438 849,600 West Corp. 23,899* ----------- 54,337 Consumer Cyclicals (1.4%) 1,407,100 Furniture Brands International 53,681* Consumer Products & Services (5.7%) 1,446,900 Alberto-Culver Class A 66,080/++/ 2,345,000 Church & Dwight 72,461/++/ 526,200 Lancaster Colony 17,601 1,201,200 Matthews International 29,057 1,577,800 Ruddick Corp. 23,872 475,500 The First Years 5,635/++/ ----------- 214,706 Defense (1.9%) 567,775 Alliant Techsystems 53,320*/++/ 983,500 ManTech International 17,713* ----------- 71,033 Electronics (0.3%) 370,200 Benchmark Electronics 9,773*/(S)/
Number of Shares Market Value/+/ (000's omitted) Energy (3.0%) 519,500 Apache Corp. $ 27,404 717,300 Cabot Oil & Gas 14,418 798,290 Swift Energy 14,401* 909,500 Unit Corp. 12,697* 2,372,950 XTO Energy 44,706 ----------- 113,626 Financial Services (0.4%) 556,700 Van der Moolen Holding 15,365* Financial Technology (1.7%) 1,028,250 Fair, Isaac & Co. 63,083/++/ Health Care (14.5%) 529,100 Andrx Group 17,698* 536,600 C. R. Bard 29,191 594,600 Datascope Corp. 17,350/(S)/ 2,033,100 DENTSPLY International 67,438 309,600 Diagnostic Products 11,099 1,586,100 Haemonetics Corp. 47,710*/++/ 1,202,800 Henry Schein 51,732* 1,411,900 IDEXX Laboratories 36,822* 420,000 Kindred Healthcare 16,796*/(S)/ 1,967,000 Mentor Corp. 64,911/++/ 321,500 MIM Corp. 4,749*/(S)/ 1,603,600 Patterson Dental 65,058* 818,200 Renal Care Group 25,119* 450,000 Respironics, Inc. 13,230* 819,800 Trigon Healthcare 58,780* 543,800 Universal Health Services Class B 20,931* ----------- 548,614 Industrial & Commercial Products (8.6%) 909,700 Brady Corp. 33,659 1,033,100 Crane Co. 25,239 882,600 Dal-Tile International 21,888* 1,013,700 Dionex Corp. 24,329* 949,600 IDEX Corp. 33,996 1,523,600 Kaydon Corp. 38,059/++/ 435,000 Mohawk Industries 27,375*/(S)/ 674,300 Mueller Industries 21,631* 933,800 Roper Industries 43,655 2,829,200 Wallace Computer Services 52,849/++/ 338,350 Woodhead Industries 5,194 ----------- 327,874 Insurance (7.0%) 1,449,600 Annuity and Life Re 24,034/++/ 1,127,500 Aon Corp. 39,045 1,058,600 Brown & Brown 37,019 677,900 Erie Indemnity 26,628 370,646 FBL Financial Group 6,653 1,300,300 HCC Insurance Holdings 36,642
See Notes to Schedule of Investments 35 Schedule of Investments Genesis Fund cont'd
Number of Shares Market Value/+/ (000's omitted) 786,500 PartnerRe Ltd. $ 44,516 891,500 Scottish Annuity & Life Holdings 14,175/++/ 647,500 W.R. Berkley 35,289 50,000 Willis Group Holdings 1,350* ----------- 265,351 Intermediates (0.5%) 983,700 Delta & Pine Land 18,631 Lodging (0.1%) 441,700 Prime Hospitality 5,172* Machinery & Equipment (0.2%) 415,620 Gardner Denver Machinery 8,234* Office Equipment (1.2%) 1,202,800 United Stationers 47,210* Oil Services (6.2%) 938,000 Cal Dive International 21,501* 1,485,800 Global Industries 13,223* 500,000 Helmerich & Payne 16,870 702,400 Nabors Industries 24,914* 2,012,277 National-Oilwell 42,077* 803,400 Oceaneering International 21,893* 776,600 Offshore Logistics 12,876* 500,000 Oil States International 4,650* 636,200 Patterson-UTI Energy 15,568* 842,300 Pride Cos. 10,849* 560,000 Smith International 36,204* 932,700 Varco International 14,923* ----------- 235,548 Packing & Containers (2.9%) 3,184,000 AptarGroup Inc. 110,166/++/ Publishing & Broadcasting (3.1%) 1,041,400 Mediacom Communications 16,288*/(S)/ 207,900 Meredith Corp. 8,204 1,600,700 R.H. Donnelley 46,084*/++/ 1,203,200 Valassis Communications 46,275* ----------- 116,851 Restaurants (5.6%) 1,270,700 AFC Enterprises 40,561* 968,275 Brinker International 33,251* 1,228,200 CEC Entertainment 59,076* 769,100 IHOP Corp. 23,996* 935,900 Outback Steakhouse 33,374* 1,176,100 Ruby Tuesday 23,757 ----------- 214,015 Retailing (3.7%) 1,485,900 Claire's Stores 28,173 1,008,500 Linens 'n Things 28,853*
Number of Shares Market Value/+/ (000's omitted) 903,800 Michaels Stores $ 26,933* 737,700 Payless ShoeSource 43,849* 303,400 Whole Foods Market 13,486* ---------- 141,294 Technology (7.6%) 832,800 Black Box 39,142*/(S)/ 272,000 CACI International 9,234* 2,330,700 CIBER, Inc. 20,091* 826,400 Davox Corp. 7,140*/++/ 2,647,400 Electronics for Imaging 51,359* 1,605,000 InterVoice-Brite 8,089* 1,582,100 Keane, Inc. 25,314* 630,500 MICROS Systems 14,205* 1,659,900 United Defense Industries 45,481*/(S)/ 1,287,800 Zebra Technologies 66,309*/++/ ---------- 286,364 Technology-Semiconductor (3.2%) 1,363,600 Actel Corp. 24,449*/++/ 367,500 Advanced Energy Industries 9,224*/(S)/ 966,000 Cognex Corp. 22,324* 392,300 Electro Scientific Industries 12,538* 1,062,100 Lattice Semiconductor 18,247* 648,600 Novellus Systems 27,624* 474,500 RadiSys Corp. 8,266* ---------- 122,672 Total Common Stocks (Cost $ 2,795,405) 3,587,912 ---------- Principal Amount Short-Term Investments (7.7%) $ 93,133,721 N&B Securities Lending Quality Fund, LLC 93,134 199,211,380 Neuberger Berman Institutional Cash Fund Trust Class 199,211/@/ ---------- Total Short-Term Investments (Cost $292,345) 292,345/#/ ---------- Total Investments (102.3%) (Cost $3,087,750) 3,880,257/##/ Liabilities, less cash, receivables and other assets [(2.3%)] (86,734) ---------- Total Net Assets (100.0%) $3,793,523 ----------
36 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Guardian Fund Top Ten Equity Holdings
Holding % 1 Exxon Mobil 2.9 2 Wells Fargo 2.8 3 Bank of America 2.2 4 ChevronTexaco Corp. 2.2 5 Wellpoint Health Networks 2.1 6 Masco Corp. 2.0 7 News Corp. ADR 2.0 8 Sabre Holdings 2.0 9 Philip Morris 1.9 10 Citigroup Inc. 1.9
Number of Shares Market Value/+/ (000's omitted) Common Stocks (93.2%) Basic Materials (4.8%) 871,000 Alcoa Inc. $ 32,724 531,500 Dow Chemical 16,625 794,100 MeadWestvaco Corp. 27,587/(S)/ 568,700 Weyerhaeuser Co. 35,157 ----------- 112,093 Capital Goods (1.8%) 665,700 Burlington Northern Santa Fe 19,319 376,470 Emerson Electric 21,681 ----------- 41,000 Communication Services (6.1%) 2,408,900 AT&T Corp. 37,434/(S)/ 1,177,900 SBC Communications 44,572 932,600 Verizon Communications 43,646 2,278,800 WorldCom, Inc. 17,136 ----------- 142,788 Consumer Cyclicals (10.9%) 243,900 Boeing Co. 11,210 1,055,600 Carnival Corp. 28,807/(S)/ 273,863 Costco Wholesale 11,300* 927,200 Dover Corp. 36,689 947,400 EchoStar Communications 24,746*/(S)/ 615,500 Federated Department Stores 25,796* 1,063,000 Gap Inc. 12,724 1,643,000 Masco Corp. 46,119 1,036,800 Sabre Holdings 45,629* 532,000 Walt Disney 12,236 ----------- 255,256 Consumer Staples (5.4%) 210,376 Clear Channel Communications 9,808* 574,200 Gillette Co. 19,632 441,619 Kimberly-Clark 27,645 1,081,200 Kroger Co. 23,949* 860,200 Philip Morris 45,298 ----------- 126,332 Energy (11.2%) 465,900 Amerada Hess 32,273 688,700 Burlington Resources 25,881 597,000 ChevronTexaco Corp. 50,411 464,700 Cooper Cameron 20,865* 1,286,800 Dynegy Inc. 32,904/(S)/ 1,644,992 Exxon Mobil 67,938 615,650 Royal Dutch Petroleum-- NY Shares 31,626 ----------- 261,898
Number of Shares Market Value/+/ (000's omitted) Financial Services (15.8%) 819,560 Bank of America $ 52,411 990,064 Citigroup Inc. 44,800 257,900 Fannie Mae 20,181 597,300 Freddie Mac 38,072 678,400 J.P. Morgan Chase 19,843 557,300 Lehman Brothers Holdings 31,487 660,500 Merrill Lynch 31,671 310,100 USA Education 28,762 1,050,200 Wachovia Corp. 34,898/(S)/ 1,416,500 Wells Fargo 66,434/(S)/ ------------ 368,559 Health Care (12.2%) 628,000 Abbott Laboratories 35,513 937,500 Becton, Dickinson & Co. 34,397 697,090 Bristol-Myers Squibb 32,763 448,300 Merck & Co. 27,494/(S)/ 951,150 Pharmacia Corp. 39,045 747,895 Schering-Plough 25,795 404,300 Wellpoint Health Networks 49,171*/(S)/ 623,000 Wyeth 39,592 ------------ 283,770 Insurance (9.7%) 580,015 Ambac Financial Group 35,990 243,200 American International Group 17,988 437,400 Chubb Corp. 32,866/(S)/ 367,200 CIGNA Corp. 32,938 611,000 MBIA, Inc. 35,713 1,337,000 MetLife, Inc. 42,624/(S)/ 417,100 MGIC Investment 27,996 ------------ 226,115 Real Estate/REIT (1.8%) 1,490,800 Equity Office Properties Trust 42,786 Technology (12.1%) 368,400 Adobe Systems 13,402 2,971,400 Agere Systems 11,885* 905,700 Agilent Technologies 28,212*/(S)/ 1,616,300 Cadence Design Systems 34,185* 2,904,600 Corning Inc. 19,548/(S)/ 193,900 First Data 15,807 477,800 Intel Corp. 13,641 693,700 Lexmark International Group 34,484* 4,015,400 Lucent Technologies 22,446/(S)/ 506,800 Microsoft Corp. 29,567* 1,633,856 Sanmina-SCI Corp. 16,584* 2,606,500 Solectron Corp. 21,556*/(S)/ 2,565,100 Sun Microsystems 21,829* ------------ 283,146
See Notes to Schedule of Investments 37 Schedule of Investments Guardian Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Utilities (1.4%) 611,300 El Paso Corp. $ 23,889 485,100 Williams Cos. 7,495/(S)/ ----------- 31,384 Total Common Stocks (Cost $2,016,919) 2,175,127 ----------- Preferred Stocks (1.9%) 2,106,500 News Corp. ADR (Cost $59,368) 45,795 ----------- Convertible Preferred Stocks (1.2%) 160,300 Ford Motor Co. Capital Trust II 8,469* 997,200 Williams Cos. 18,897* ----------- Total Convertible Preferred Stocks (Cost $33,017) 27,366 ----------- Principal Amount Short-Term Investments (12.4%) $176,605,514 N&B Securities Lending Quality Fund, LLC 176,606 112,650,037 Neuberger Berman Institutional Cash Fund Trust Class 112,650/@/ ----------- Total Short-Term Investments (Cost $289,256) 289,256/#/ ----------- Total Investments (108.7%) (Cost $2,398,560) 2,537,544/##/ Liabilities, less cash, receivables and other assets [(8.7%)] (203,334) ----------- Total Net Assets (100.0%) $ 2,334,210 -----------
38 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments International Fund
Top Ten Equity Holdings Holding Country Industry % 1 Diageo PLC United Kingdom Beverages 4.0 2 ENI SpA Italy Energy 2.8 3 Lloyds TSB Group United Kingdom Banking 2.4 4 TotalFinaElf SA ADR France Energy 2.3 5 Banco Popular Espanol Spain Banking 2.1 6 CNP Assurances France Insurance 2.1 7 Petro-Canada Canada Energy 2.0 8 BP PLC United Kingdom Energy 2.0 9 Gjensidige NOR Sparebank Norway Banking 1.9 10 Anglo Irish Bank Ireland Banking & Financial 1.9 1.9
Number of Shares Market Value/+/ (000's omitted) Common Stocks (89.8%) Australia (4.0%) 125,342 Australia & New Zealand Banking Group $ 1,195 226,530 Baycorp Advantage 638 54,632 National Australia Bank 1,011 213,216 Ramsey Health Care 524 -------- 3,368 Canada (3.8%) 73,170 Petro-Canada 1,720 44,825 Suncor Energy 1,495/(S)/ -------- 3,215 Denmark (1.5%) 4,130 Group 4 Falck 440 22,150 Novo Nordisk, B Shares 861 -------- 1,301 Finland (1.9%) 34,010 Nokia Oyj ADR 706 38,325 Vaisala Oyj, A Shares 878 -------- 1,584 France (7.5%) 56,945 CNP Assurances 1,743 72,860 Pinguely-Haulotte 631
Number of Shares Market Value/+/ (000's omitted) 4,620 Publicis Groupe $ 122 25,151 Sodexho Alliance 997 16,461 Technip-Coflexip SA ADR 521*/(S)/ 26,070 TotalFinaElf SA ADR 1,918 13,740 Vivendi Environnement 434 ------ 6,366 Germany (3.7%) 7,100 AMB Aachener & Muenchener Beteiligungs 711 20,050 AWD Holding 434 89,200 Techem AG 1,389* 22,231 Wedeco AG Water Technology 617* ------ 3,151 Hong Kong (3.3%) 50,710 China Mobile (Hong Kong) ADR 731*/(S)/ 2,400,000 Denway Motors 616 122,400 Kowloon Motor Bus Holdings 516 1,638,000 Texwinca Holdings 940 ------ 2,803 Ireland (6.3%) 107,235 Allied Irish Banks 1,198 370,508 Anglo Irish Bank 1,572 80,745 Bank of Ireland 794 209,400 Grafton Group 703
See Notes to Schedule of Investments 39 Schedule of Investments International Fund cont'd
Number of Shares Market Value/+ (000's omitted) 43,000 Irish Life & Permanent $ 477 242,300 Kingspan Group 556 ------ 5,300 Italy (3.8%) 170,050 ENI SpA 2,332 90,000 TIM SpA 424 121,750 UniCredito Italiano 475 ------ 3,231 Japan (9.1%) 14,000 ADERANS Co. 423 11,700 Aiful Corp. 583 17,900 Capcom Co. 403 46,000 Dainippon Pharmaceutical 438 115,000 Konica Corp. 684 40,000 Nippon Electric Glass 313 82 NTT Corp. 261 39 NTT DoCoMo 405 53,000 Olympus Optical 702 7,400 Promise Co. 312 15,600 Sammy Corp. 451 20,700 Sanix Inc. 358 12,800 Sony Corp. 581 33,000 Takeda Chemical Industries 1,337 13,600 USS Co. 430 ------ 7,681 Korea (2.5%) 27,600 Humax Co. 1,067 6,010 Pacific Corp. 611 59,600 Wooyoung Co. 424* ------ 2,102 Mexico (0.6%) 21,915 Cemex SA de CV ADR 535/(S)/ Netherlands (4.9%) 28,320 Heineken NV 1,155 37,975 ING Groep 904 16,305 Koninklijke Ahold 376 14,680 Koninklijke Numico 327 18,020 Royal Dutch Petroleum-- NY Shares 926 44,855 Vedior NV 505 ------ 4,193 Norway (3.7%) 58,715 Bergesen d.y. ASA, A Shares 1,093 44,250 Frontline Ltd. 484 48,860 Gjensidige NOR Sparebank 1,584 ------ 3,161
Number of Shares Market Value/+/ (000's omitted) Singapore (0.5%) 164,000 Elec & Eltek International $ 436 Spain (9.5%) 96,940 Banco Bilbao Vizcaya Argentaria 1,120 51,395 Banco Popular Espanol 1,816 132,585 Banco Santander Central Hispano 1,058 51,150 Centros Comerciales Carrefour 642 39,515 Grupo Dragados 491 63,670 Grupo Ferrovial 1,353 44,449 Telefonica SA ADR 1,560/(S)/ ------- 8,040 Sweden (1.9%) 24,320 Munters AB 493 25,450 Perbio Science 459* 47,800 Svenska Handelsbanken, A Shares 648 ------- 1,600 Switzerland (1.8%) 7,425 Kaba Holding, B Shares 1,505 United Kingdom (19.5%) 54,660 Amersham PLC 553 128,984 BAA PLC 1,164 203,100 BP PLC 1,672 97,655 Brambles Industries 424* 89,685 British Sky Broadcasting Group 910* 242,473 Diageo PLC 2,879 11,335 Diageo PLC ADR 547/(S)/ 35,279 GlaxoSmithKline PLC 860 308,145 Hays PLC 860 214,537 Lloyds TSB Group 2,062 42,350 Pearson PLC 467 60,444 Prudential PLC 561 459,810 RPS Group 942 149,451 Smith & Nephew 900 133,855 Tesco PLC 477 675,761 Vodafone Group 1,278 ------- 16,556 Total Common Stocks (Cost $77,850) 76,128 ------- Preferred Stocks (1.3%) 13,740 Fresenius Medical Care, Germany 538 69,725 ProSieben Media, Germany 532 -------
40 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments International Fund cont'd
Number of Shares Market Value/+ (000's omitted) Total Preferred Stocks (Cost $2,328) $1,070 ------ Warrants (0.0%) 13,740 Vivendi Environnement (Cost $0) 5 ------ Principal Amount Short-Term Investments (12.6%) $5,177,594 N&B Securities Lending Quality Fund, LLC 5,178
Principal Amount Market Value/+ (000's omitted) $5,498,283 Neuberger Berman Institutional Cash Fund Trust Class $ 5,498/@/ ------- Total Short-Term Investments (Cost $10,676) 10,676/#/ ------- Total Investments (103.7%) (Cost $90,854) 87,879/## Liabilities, less cash, receivables and other assets [(3.7%)] (3,161) ------- Total Net Assets (100.0%) $84,718 -------
Summary Schedule of Investments by Industry International Fund
Market Value/+/ Percentage of Industry (000's omitted) Net Assets -------- --------------- ------------- Energy $10,583 12.5% Banking 10,497 12.4% Other Assets--Net 7,515 8.9% Capital Goods 5,726 6.8% Commercial Services 4,657 5.5% Beverages 4,581 5.4% Banking & Financial 4,512 5.3% Health Products & Services 3,676 4.3% Telecommunications 3,620 4.3% Pharmaceutical 3,496 4.1% Utilities 3,387 4.0% Transportation 3,258 3.9% Insurance 3,015 3.6% Finance 2,233 2.6% Retailing 2,199 2.6% Telecommunications--Wireless 2,106 2.5% Technology--Hardware 1,567 1.8% Automotive 1,513 1.8% Media 1,443 1.7% Consumer Durables 1,265 1.5% Consumer Products & Services 1,034 1.2% Restaurants 997 1.2% Basic Materials 535 0.6% Manufacturing 451 0.5% Technology--Software 403 0.5% Consumer Staples 327 0.4% Advertising 122 0.1% ------- ------ Total Net Assets $84,718 100.0% ------- ------
See Notes to Schedule of Investments 41 Schedule of Investments Manhattan Fund Top Ten Equity Holdings
Holding % 1 IDEC Pharmaceuticals 2.8 2 Westwood One 2.7 3 Quest Diagnostics 2.4 4 Intersil Corp. 2.4 5 Express Scripts 2.1 6 International Game Technology 2.1 7 Best Buy 2.1 8 Laboratory Corp. of America Holdings 2.0 9 SunGard Data Systems 2.0 10 Talisman Energy 1.9
Number of Shares Market Value/+/ (000's omitted) Common Stocks (99.4%) Biotechnology (7.3%) 109,200 Cephalon, Inc. $ 6,366*/(S)/ 171,800 Genzyme Corp. 7,625* 193,300 IDEC Pharmaceuticals 12,143* 27,800 InterMune Inc. 1,009*/(S)/ 248,500 Millennium Pharmaceuticals 4,667*/(S)/ --------- 31,810 Business Services--IT Business Services (6.7%) 89,200 Affiliated Computer Services 4,363* 123,550 Apollo Group 5,998* 202,100 Concord EFS 6,069*/(S)/ 108,400 SEI Investments 4,304 277,300 SunGard Data Systems 8,560* --------- 29,294 Capital Equipment (0.6%) 38,800 American Standard 2,534* Communications Equipment (3.4%) 133,100 Harris Corp. 4,559 62,700 L-3 Communications Holdings 6,888*/(S)/ 146,600 Scientific-Atlanta 3,279 --------- 14,726 Computer Related (1.1%) 150,400 Brocade Communications Systems 3,304* 522,700 Palm, Inc. 1,579* --------- 4,883 Computers & Systems (0.4%) 105,900 McDATA Corp. 1,669* Consumer Cyclical--Leisure & Consumer Services (4.1%) 136,600 International Game Technology 9,223* 65,000 MGM Mirage 2,236* 127,300 Stanley Works 6,420 --------- 17,879 Diagnostic Equipment (0.6%) 118,100 Cytyc Corp. 2,771*/(S)/ Electrical Equipment (1.2%) 166,400 Broadcom Corp. 5,100* Energy (6.9%) 111,000 EOG Resources 3,906/(S)/ 298,400 Rowan Cos. 5,565* 214,400 Talisman Energy 8,124
Number of Shares Market Value/+/ (000's omitted) 166,900 Weatherford International $ 7,694* 244,550 XTO Energy 4,607 --------- 29,896 Finance (5.3%) 81,500 Affiliated Managers Group 5,430* 101,700 Investment Technology Group 4,721* 96,500 Legg Mason 5,059 178,200 National Commerce Financial 4,696 111,600 Waddell & Reed Financial 3,438 --------- 23,344 Financial Services (0.7%) 373,800 E*TRADE Group 3,028*/(S)/ Food & Beverage (1.5%) 264,300 Pepsi Bottling Group 6,568 Hardware (0.8%) 204,900 Network Appliance 3,276*/(S)/ Health Care (16.3%) 42,500 AmerisourceBergen Corp. 2,877 101,400 Caremark Rx 1,769* 179,300 Express Scripts 9,282* 73,500 Forest Laboratories 5,845*/(S)/ 101,000 Gilead Sciences 7,116* 183,100 Guidant Corp. 7,599*/(S)/ 146,100 HEALTHSOUTH Corp. 1,740* 215,200 King Pharmaceuticals 6,684* 107,200 Laboratory Corp. of America Holdings 8,735*/(S)/ 28,800 OSI Pharmaceuticals 1,096* 149,300 Quest Diagnostics 10,587* 45,900 Universal Health Services Class B 1,767* 172,500 Zimmer Holdings 6,169* --------- 71,266 Insurance (0.9%) 40,200 XL Capital 3,829 Internet (4.8%) 36,000 Internet Security Systems 853*/(S)/ 158,500 Intuit Inc. 6,006* 229,700 KPMG Consulting 4,027* 79,200 Symantec Corp. 2,856*/(S)/ 117,000 VeriSign, Inc. 2,776*/(S)/ 314,600 Yahoo! Inc. 4,549*/(S)/ --------- 21,067 Media (4.6%) 334,900 Charter Communications 3,483*/(S)/ 116,300 Univision Communications 4,796* 326,200 Westwood One 11,668* --------- 19,947
42 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Manhattan Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Retail (12.5%) 229,200 Abercrombie & Fitch $ 6,106* 145,400 American Eagle Outfitters 3,631* 203,500 Bed Bath & Beyond 6,797* 136,300 Best Buy 9,187* 116,900 BJ's Wholesale Club 4,810* 58,900 CDW Computer Centers 3,110* 33,900 Circuit City Stores-CarMax Group 906* 44,900 Coach, Inc. 2,239* 75,300 Krispy Kreme Doughnuts 2,784*/(S)/ 17,800 Mohawk Industries 1,120* 165,600 Talbots, Inc. 6,642 142,700 Tiffany & Co. 4,682 69,200 TJX Cos. 2,686 ---------- 54,700 Semiconductors (8.5%) 115,300 AVX Corp. 2,083 263,700 Integrated Device Technology 6,743* 379,700 Intersil Corp. 10,396*/(S)/ 113,600 KLA-Tencor 6,579*/(S)/ 159,300 Microchip Technology 5,445* 162,400 Xilinx Inc. 5,833* ---------- 37,079 Software (6.1%) 160,300 Adobe Systems 5,832 138,100 BMC Software 2,217* 80,200 Electronic Arts 4,316* 124,000 Emulex Corp. 4,025* 140,700 Mercury Interactive 4,767* 96,600 Network Associates 2,291*/(S)/ 88,900 VERITAS Software 3,155* ---------- 26,603 Systems & Components (1.1%) 345,300 Flextronics International 4,952* Technology (3.0%) 345,900 Cadence Design Systems 7,316* 115,500 NVIDIA Corp. 5,891*/(S)/ ---------- 13,207 Transportation (1.0%) 211,300 Southwest Airlines 4,461 Total Common Stocks (Cost $416,338) 433,889 ----------
Principal Amount Market Value/+/ (000's omitted) Short-Term Investments (19.9%) $78,205,701 N&B Securities Lending Quality Fund, LLC $ 78,206 8,468,019 Neuberger Berman Institutional Cash Fund Trust Class 8,468/@/ -------- Total Short-Term Investments (Cost $86,674) 86,674/#/ -------- Total Investments (119.3%) (Cost $503,012) 520,563/##/ Liabilities, less cash, receivables and other assets [(19.3%)] (84,142) -------- Total Net Assets (100.0%) $436,421 --------
See Notes to Schedule of Investments 43 Schedule of Investments Millennium Fund Top Ten Equity Holdings
Holding % 1 Artisan Components 3.8 2 MemberWorks Inc. 3.2 3 Alliance Data Systems 3.1 4 Crown Media Holdings 2.3 5 Coinstar, Inc. 2.2 6 DIANON Systems 2.2 7 Charlotte Russe Holding 2.2 8 Boston Private Financial Holdings 1.9 9 American Medical Systems Holdings 1.9 10 HCC Insurance Holdings 1.9
Number of Shares Market Value/+/ (000's omitted) Common Stocks (100.7%) Biotechnology (0.7%) 30,600 CryoLife, Inc. $ 765* Business Services (17.4%) 54,700 Alliance Gaming 1,769* 133,700 AnswerThink Consulting Group 655* 68,500 Cal Dive International 1,570* 78,300 Coinstar, Inc. 2,333* 207,100 Crown Media Holdings 2,413* 23,200 Education Management 918* 207,900 MemberWorks Inc. 3,329*/(S)/ 55,800 National-Oilwell 1,167* 136,000 Princeton Review 1,135* 59,300 RMH Teleservices 948*/(S)/ 122,000 Scientific Games Class A 1,152* 46,500 Tripos, Inc. 1,014* --------- 18,403 Commercial Services (1.9%) 78,400 Clark/Bardes 1,994* Computers & Systems (2.0%) 209,100 Handspring, Inc. 955*/(S)/ 25,300 Kronos Inc. 1,133* --------- 2,088 Consumer Cyclical--Consumer Media (1.7%) 107,800 Oakley, Inc. 1,744* Energy (1.2%) 182,300 Power-One 1,282* Entertainment (3.0%) 63,600 Alloy, Inc. 964* 80,000 Magna Entertainment 702* 83,000 Shuffle Master 1,548* --------- 3,214 Financial Services (11.5%) 10,300 Affiliated Managers Group 686* 155,600 Alliance Data Systems 3,299* 21,200 Arthur J. Gallagher 739 89,700 Boston Private Financial Holdings 2,053 18,200 Commerce Bancorp 757 92,300 Euronet Worldwide 1,674*/(S)/ 71,600 HCC Insurance Holdings 2,018 19,950 Investment Technology Group 926* --------- 12,152 Health Care (13.0%) 28,000 Accredo Health 1,446* 63,800 Cell Therapeutics 1,410*/(S)/ 29,800 Cephalon, Inc. 1,737* 23,700 Charles River Laboratories International 703*
Number of Shares Market Value/+/ (000's omitted) 50,500 CV Therapeutics $ 1,952*/(S)/ 37,400 DIANON Systems 2,313* 36,300 OSI Pharmaceuticals 1,381* 58,800 Province Healthcare 1,654* 89,100 Select Medical 1,128* --------- 13,724 Health Products & Services (8.2%) 98,200 American Medical Systems Holdings 2,047* 30,300 AMN Healthcare Services 795*/(S)/ 129,500 Endocare, Inc. 1,953*/(S)/ 95,700 Impax Laboratories 979*/(S)/ 36,600 Integra LifeSciences Holdings 1,028* 38,700 Med-Design 544*/(S)/ 86,000 Wright Medical Group 1,326* --------- 8,672 Internet (1.0%) 191,600 Viewpoint Corp. 1,058*/(S)/ Manufacturing (1.0%) 36,500 Applied Films 1,052* Oil & Gas (1.1%) 48,400 Patterson-UTI Energy 1,184* Retail (10.4%) 95,000 Charlotte Russe Holding 2,304*/(S)/ 277,000 dELiA*s Corp. 1,958* 24,300 GameStop Corp. 464* 49,800 Hot Topic 1,157*/(S)/ 56,800 Insight Enterprises 1,212* 79,300 J. Jill Group 1,836* 35,300 Too Inc. 1,093* 50,200 Tuesday Morning 966* --------- 10,990 Software (6.9%) 59,650 Activision, Inc. 1,703* 93,300 Borland Software 1,281* 136,100 OPNET Technologies 1,198* 89,400 PLATO Learning 1,606* 117,000 Witness Systems 1,523* --------- 7,311 Technology (4.0%) 66,800 Concurrent Computer 669* 342,100 Lantronix, Inc. 752* 75,300 Precise Software Solutions 1,593* 53,670 TALX Corp. 1,196 --------- 4,210 Technology--Hardware (1.0%) 95,500 Microtune, Inc. 1,090*/(S)/
44 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Millennium Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Technology--Semiconductor (10.1%) 303,900 Artisan Components $ 4,054* 92,700 ESS Technology 1,932 36,600 Integrated Device Technology 936* 41,500 Intersil Corp. 1,136* 59,000 LTX Corp. 1,274* 92,700 Oak Technology 1,303* --------- 10,635 Technology--Software (0.7%) 51,500 IONA Technologies ADR 718*/(S)/ Telecommunications (1.4%) 36,700 AirGate PCS 337* 54,300 Intrado Inc. 774* 203,300 UbiquiTel Inc. 311*/(S)/ --------- 1,422 Tobacco (1.7%) 64,095 Vector Group 1,784/(S)/ Transportation (0.8%) 74,600 RailAmerica, Inc. 825* Total Common Stocks (Cost $106,855) 106,317 --------- Principal Amount Short-Term Investments (20.4%) $21,543,286 N&B Securities Lending Quality Fund, LLC (Cost $21,543) 21,543/#/ --------- Total Investments (121.1%) (Cost $ 128,398) 127,860/##/ Liabilities, less cash, receivables and other assets [(21.1%)] (22,236) --------- Total Net Assets (100.0%) $ 105,624 ---------
See Notes to Schedule of Investments 45 Schedule of Investments Partners Fund Top Ten Equity Holdings
Holding % 1 CIGNA Corp. 3.6 2 Computer 3.2 Sciences 3 Masco Corp. 2.9 4 Carnival Corp. 2.6 5 Sabre Holdings 2.5 6 Berkshire 2.5 Hathaway Class B 7 XL Capital 2.5 8 IBM 2.4 9 Scientific- 2.2 Atlanta 10 Citigroup Inc. 2.2
Number of Shares Market Value/+/ (000's omitted) Common Stocks (99.8%) Advertising (1.2%) 915,700 Interpublic Group of Companies $ 24,907 Auto Related (1.9%) 929,400 Navistar International 39,518 Banking & Financial (1.7%) 688,300 Capital One Financial 33,912 Basic Materials (2.8%) 1,005,600 Alcoa Inc. 37,780 284,300 Monsanto Co. 8,802/(S)/ 179,300 Praxair, Inc. 10,382 ----------- 56,964 Building, Construction & Furnishing (1.4%) 307,500 Centex Corp. 17,970 266,200 D.R. Horton 10,622/(S)/ ----------- 28,592 Building Materials (0.8%) 296,700 Lennar Corp. 16,381 Business Services (1.4%) 927,100 CSG Systems International 28,907* Capital Goods (2.9%) 541,300 Parker-Hannifin 26,967 261,000 SPX Corp. 33,019*/(S)/ ----------- 59,986 Communication Services (2.2%) 2,038,300 Scientific-Atlanta 45,597 Consumer Cyclicals (14.5%) 170,900 Best Buy 11,519*/(S)/ 687,400 Black & Decker 33,339 1,932,300 Carnival Corp. 52,732 815,800 Costco Wholesale 33,660* 2,112,400 Masco Corp. 59,295 931,000 RadioShack Corp. 25,547 1,167,500 Sabre Holdings 51,382* 811,900 Starwood Hotels & Resorts Worldwide 29,228 ----------- 296,702 Consumer Goods & Services (2.2%) 2,516,300 Cendant Corp. 43,809* Consumer Staples (9.6%) 779,400 Albertson's Inc. 23,585 233,200 Kimberly-Clark 14,598 754,700 Kroger Co. 16,716* 2,758,100 Liberty Media 35,304*/(S)/ 875,400 Newell Rubbermaid 27,251
Number of Shares Market Value/+/ (000's omitted) 296,700 Tricon Global Restaurants $ 17,544* 640,200 Viacom Inc. Class B 29,801* 1,393,300 Walt Disney 32,046 ----------- 196,845 Energy (4.6%) 462,600 Anadarko Petroleum 24,101/(S)/ 814,600 Cooper Cameron 36,576* 249,800 Schlumberger Ltd. 14,541 481,500 Talisman Energy 18,244 ----------- 93,462 Financial Services (19.5%) 789,000 American Express 28,759 689,800 Aon Corp. 23,888 786,900 Bank of New York 29,619 21,000 Berkshire Hathaway Class B 50,925* 983,000 Citigroup Inc. 44,481 438,500 Freddie Mac 27,950 400,900 Lehman Brothers Holdings 22,651 875,200 Morgan Stanley Dean Witter 42,990 544,700 Principal Financial Group 13,269* 146,000 Prudential Financial 4,463*/(S)/ 695,700 Washington Mutual 22,631 782,600 Wells Fargo 36,704 528,359 XL Capital 50,331/(S)/ ----------- 398,661 Health Care (6.8%) 1,021,000 Boston Scientific 22,830* 819,300 CIGNA Corp. 73,491 589,500 Merck & Co. 36,154 178,900 Schering-Plough 6,170 ----------- 138,645 Insurance (3.2%) 348,800 Hartford Financial Services Group 23,369 862,100 St. Paul Cos. 42,157 ----------- 65,526 Oil & Gas (1.9%) 894,400 FMC Technologies 16,645* 328,800 Smith International 21,257* ----------- 37,902 Retail (1.9%) 883,200 Abercrombie & Fitch 23,528* 746,300 Intimate Brands 14,426 ----------- 37,954
46 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Partners Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Technology (18.4%) 687,100 BMC Software $ 11,028* 1,488,900 Cadence Design Systems 31,490* 1,087,800 Celestica Inc. 35,789* 1,369,500 Computer Sciences 65,065*/(S)/ 2,022,700 Compuware Corp. 23,079* 989,600 Convergys Corp. 30,173* 2,749,300 General Motors Class H 40,552* 492,600 IBM 48,334/(S)/ 752,200 Lexmark International Group 37,392* 699,700 Micron Technology 22,495* 987,300 Waters Corp. 30,853* ----------- 376,250 Utilities (0.9%) 1,148,400 Williams Cos. 17,743 Total Common Stocks (Cost $1,830,997) 2,038,263 -----------
Principal Amount Market Value/+/ (000's omitted) Short-Term Investments (6.6%) $117,758,750 N&B Securities Lending Quality Fund, LLC $ 117,759 17,299,161 Neuberger Berman Institutional Cash Fund Trust Class 17,299/@/ ---------- Total Short-Term Investments (Cost $ 135,058) 135,058/#/ ---------- Total Investments (106.4%) (Cost $ 1,966,055) 2,173,321/##/ Liabilities, less cash, receivables and other assets [(6.4%)] (130,411) ---------- Total Net Assets (100.0%) $2,042,910 ----------
See Notes to Schedule of Investments 47 Schedule of Investments Regency Fund Top Ten Equity Holdings
Holding % 1 AutoNation, Inc. 2.0 2 Valassis Communications 1.9 3 Radian Group 1.8 4 CIGNA Corp. 1.8 5 GTECH Holdings 1.8 6 Sherwin- Williams 1.7 7 Brinker International 1.6 8 Lear Corp. 1.6 9 American Standard 1.6 10 Harris Corp. 1.6
Number of Shares Market Value/+/ (000's omitted) Common Stocks (93.4%) Agriculture (0.9%) 27,130 Archer-Daniels-Midland $ 376 Auto Related (2.0%) 62,200 AutoNation, Inc. 777* Automotive (1.6%) 14,200 Lear Corp. 635* Banking (4.6%) 9,900 City National 503 1,000 Cullen/Frost Bankers 35 11,600 North Fork Bancorp. 401 10,900 TCF Financial 560 6,300 Zions Bancorp 333 -------- 1,832 Banking & Financial (2.5%) 17,300 Golden State Bancorp 527 19,300 Southtrust Corp. 488 -------- 1,015 Building, Construction & Furnishing (1.2%) 9,900 Vulcan Materials 478 Business Services (1.5%) 17,500 Manpower Inc. 587 Chemicals (1.5%) 12,000 Air Products & Chemicals 582 Consumer Cyclicals (0.5%) 4,500 Sabre Holdings 198* Consumer Goods & Services (2.7%) 5,500 Tricon Global Restaurants 325* 19,700 Valassis Communications 758* -------- 1,083 Consumer Products & Services (1.3%) 20,400 Viad Corp. 508 Electrical & Electronics (2.2%) 14,600 Arrow Electronics 391* 9,800 Parker-Hannifin 488 -------- 879 Electronics (1.0%) 21,800 Vishay Intertechnology 386* Energy (3.3%) 15,700 FirstEnergy Corp. 575 3,100 Kinder Morgan 127 36,900 Sierra Pacific Resources 596 -------- 1,298 Financial Services (9.0%) 9,650 Ambac Financial Group 599 8,300 Comerica Inc. 497
Number of Shares Market Value/+/ (000's omitted) 11,600 Federated Investors $ 366 7,700 John Hancock Financial Services 296 16,900 KPMG Consulting 296* 7,900 MBIA, Inc. 462 14,700 Principal Financial Group 358* 15,700 Radian Group 732 -------- 3,606 Food & Beverage (1.5%) 8,300 Dean Foods 595* Health Care (7.6%) 5,200 Anthem, Inc. 302* 8,500 Becton, Dickinson & Co. 312 9,300 C. R. Bard 506 24,200 Davita, Inc. 541* 17,700 ICN Pharmaceuticals 493 19,700 Omnicare, Inc. 417 15,000 Watson Pharmaceuticals 439* -------- 3,010 Health Products & Services (0.8%) 13,000 Lincare Holdings 327* Industrial Goods & Services (4.1%) 9,700 American Standard 633* 25,900 Sherwin-Williams 684 11,700 Waste Management 308 -------- 1,625 Insurance (7.4%) 14,200 Aon Corp. 492 8,000 Chubb Corp. 601 8,000 CIGNA Corp. 718 9,400 Loews Corp. 548 6,300 XL Capital 600 -------- 2,959 Media (2.2%) 7,300 Cablevision Systems 262/(S)/ 4,300 Knight-Ridder 290 11,500 USA Networks 340* -------- 892 Office Equipment (1.5%) 14,600 Pitney Bowes 609 Oil & Gas (6.1%) 7,810 Apache Corp. 412 14,700 Equitable Resources 480 19,700 Ocean Energy 359 11,100 Sunoco, Inc. 428 7,700 Talisman Energy 292 25,150 XTO Energy 474 -------- 2,445
48 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Regency Fund cont'd
Number of Shares Market Value/+/ (000's omitted) Publishing & Broadcasting (1.3%) 25,200 Reader's Digest Class A $ 526 Railroads (1.5%) 16,100 CSX Corp. 608 Real Estate/REIT (3.6%) 20,900 Archstone-Smith Trust 541 13,100 Avalonbay Communities 604 6,700 Vornado Realty Trust 280 -------- 1,425 Recreational Equipment (1.2%) 18,100 Brunswick Corp. 489 Restaurants (1.6%) 18,500 Brinker International 635* Retail (5.3%) 36,200 Foot Locker 597* 14,100 Liz Claiborne 428 13,600 May Department Stores 498 10,200 Payless ShoeSource 606* -------- 2,129 Software (1.0%) 22,700 Sybase, Inc. 383* Systems (1.8%) 13,400 GTECH Holdings 715* Technology (2.9%) 7,900 Beckman Coulter 377 22,900 Cadence Design Systems 484* 18,300 Comverse Technology 286* -------- 1,147 Telecommunications (2.3%) 13,500 Belo Corp. 296 18,200 Harris Corp. 624 -------- 920 Transportation (2.7%) 9,600 Canadian National Railway 481 16,000 Teekay Shipping 592 -------- 1,073 Utilities (1.2%) 9,375 Exelon Corp. 462 Total Common Stocks (Cost $34,423) 37,214 --------
Principal Amount Market Value/+/ (000's omitted) Short-Term Investments (5.5%) $ 265,818 N&B Securities Lending Quality Fund, LLC $ 266 1,926,615 Neuberger Berman Institutional Cash Fund Trust Class 1,927/@/ ------- Total Short-Term Investments (Cost $2,193) 2,193/#/ ------- Total Investments (98.9%) (Cost $36,616) 39,407/##/ Cash, receivables and other assets, less liabilities (1.1%) 454 ------- Total Net Assets (100.0%) $39,861 -------
See Notes to Schedule of Investments 49 Schedule of Investments Socially Responsive Fund Top Ten Equity Holdings
Holding % 1 Progressive Corp. 5.1 2 Citigroup Inc. 4.6 3 Liberty Media 4.5 4 UnitedHealth Group 4.4 5 Johnson & Johnson 4.3 6 Equity Residential Properties Trust 4.2 7 KeySpan Corp. 4.1 8 Newfield Exploration 4.0 9 Danaher Corp. 3.9 10 National Instruments 3.6
Number of Shares Market Value/+/ (000's omitted) Common Stocks (96.9%) Communications (11.3%) 196,000 AT&T Wireless Services $ 1,977* 105,400 Comcast Corp. Class A Special 3,570* 390,700 Liberty Media 5,001* 110,100 Vodafone Group ADR 2,092 ------- 12,640 Consumer Goods & Services (2.3%) 41,900 Kimberly-Clark 2,623 Diversified (3.9%) 64,500 Danaher Corp. 4,336 Energy (8.3%) 65,400 Baker Hughes 2,309 50,000 BP PLC ADR 2,477 124,100 Newfield Exploration 4,504* ------- 9,290 Financial Services (10.1%) 114,400 Citigroup Inc. 5,176 50,000 Hartford Financial Services Group 3,350 50,400 Lehman Brothers Holdings 2,848 ------- 11,374 Health Care (14.1%) 39,500 Amgen Inc. 2,290* 80,000 Johnson & Johnson 4,872 60,700 Merck & Co. 3,723 68,200 UnitedHealth Group 4,944 ------- 15,829 Insurance (5.1%) 36,400 Progressive Corp. 5,671 Oil & Gas (1.7%) 33,600 Helmerich & Payne 1,127 21,400 Nabors Industries 759 * ------- 1,886 REIT (7.6%) 132,300 Equity Office Properties Trust 3,797 173,900 Equity Residential Properties Trust 4,687 ------- 8,484 Retail (3.2%) 87,000 Target Corp. 3,645 Retail Grocery (3.2%) 119,700 Albertson's Inc. 3,622 Technology (18.7%) 162,000 Dell Computer 4,000 * 25,000 IBM 2,453
Number of Shares Market Value/+/ (000's omitted) 181,500 Lattice Semiconductor $ 3,118* 109,400 National Instruments 4,003* 83,400 Synopsys, Inc. 3,928*/(S)/ 104,300 Teradyne, Inc. 3,495* ----------- 20,997 Transportation (3.3%) 74,500 Canadian National Railway 3,736 Utilities (4.1%) 145,100 KeySpan Corp. 4,651 Total Common Stocks (Cost $98,310) 108,784 ----------- Warrants (0.0%) 150,000 Dime Bancorp (Cost $49) 12* ----------- Principal Amount Repurchase Agreements (3.5%) $3,939,000 State Street Bank and Trust Co., Repurchase Agreement, 1.85%, due 3/1/02, dated 2/28/02, Maturity Value $3,939,202, Collateralized by $4,025,000 Fannie Mae, Medium Term Notes, 3.50%, due 1/16/04 (Collateral value $4,060,219) (Cost $3,939) 3,939/#/ ----------- Short-Term Investments (3.6%) 100,000 Community Capital Bank, 1.75%, due 3/30/02 100 100,000 Self Help Credit Union, 1.74%, due 5/21/02 100 3,886,515 N&B Securities Lending Quality Fund, LLC 3,887 ----------- Total Short-Term Investments (Cost $4,087) 4,087/#/ ----------- Total Investments (104.0%) (Cost $106,385) 116,822/##/ Liabilities, less cash, receivables and other assets [(4.0%)] (4,535) ----------- Total Net Assets (100.0%) $ 112,287 -----------
50 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Schedule of Investments Technology Fund Top Ten Equity Holdings
Holding % 1 Mercury Interactive 4.5 2 Microsoft Corp. 3.7 3 Taiwan Semiconductor Manufacturing ADR 3.6 4 VERITAS Software 3.5 5 Xilinx Inc. 3.1 6 Dell Computer 3.0 7 Micron Technology 2.9 8 KLA-Tencor 2.9 9 Integrated Device Technology 2.9 10 Texas Instruments 2.8
Number of Shares Market Value/+/ (000's omitted) Common Stocks (96.3%) Communications Equipment (8.0%) 7,300 Brocade Communications Systems $ 161* 11,925 Cisco Systems 170* 5,200 Emulex Corp. 169* 14,000 Viewpoint Corp. 77* ------ 577 Computers & Systems (5.2%) 1,300 CDW Computer Centers 69* 8,800 Dell Computer 217* 10,000 Sun Microsystems 85* ------ 371 Electrical Equipment (14.8%) 4,000 Artisan Components 53* 5,000 Broadcom Corp. 153* 8,125 Integrated Device Technology 208* 3,600 KLA-Tencor 208* 3,900 LTX Corp. 84* 3,400 Microtune, Inc. 39* 5,700 PMC-Sierra 83* 4,800 Power-One 34* 5,900 Teradyne, Inc. 198* ------ 1,060 Hardware (2.0%) 8,900 Network Appliance 142* Health Care (5.6%) 1,300 Cephalon, Inc. 76* 2,400 Gilead Sciences 169* 2,500 IDEC Pharmaceuticals 157* ------ 402 Internet (12.7%) 3,200 eBay Inc. 167*/(S)/ 6,300 Internet Security Systems 149* 4,250 Intuit Inc. 161* 6,900 KPMG Consulting 121* 4,400 Network Associates 104* 3,000 Websense, Inc. 67* 10,000 Yahoo! Inc. 145*/(S)/ ------ 914 Media (1.4%) 1,800 Electronic Arts 97*
Number of Shares Market Value/+/ (000's omitted) Semiconductors (21.9%) 4,950 Intel Corp. $ 141 3,500 Linear Technology 129 4,100 Maxim Integrated Products 188* 1,900 Microchip Technology 65* 6,500 Micron Technology 209* 3,150 NVIDIA Corp. 161*/(S)/ 15,900 Taiwan Semiconductor Manufacturing ADR 258/(S)/ 6,900 Texas Instruments 202 6,100 Xilinx Inc. 219* ------ 1,572 Software (23.7%) 4,700 Adobe Systems 171 11,500 BMC Software 185* 13,400 Borland Software 184* 9,600 Mercury Interactive 325* 4,500 Microsoft Corp. 263* 2,100 Precise Software Solutions 44* 5,000 Rational Software 93* 6,800 Siebel Systems 189* 7,000 VERITAS Software 248* ------ 1,702 Systems & Components (1.0%) 4,800 Flextronics International 69* Total Common Stocks (Cost $7,255) 6,906 ------ Principal Amount Short-Term Investments (7.2%) $517,960 N&B Securities Lending Quality Fund, LLC (Cost $518) 518/#/ ------ Total Investments (103.5%) (Cost $7,773) 7,424/##/ Liabilities, less cash, receivables and other assets [(3.5%)] (252) ------ Total Net Assets (100.0%) $7,172 ------
See Notes to Schedule of Investments 51 Notes to Schedule of Investments + Investment securities of each Fund 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, with the exception of securities held by Neuberger Berman International Fund, which are valued at the last available bid price. The Funds value all other securities by a method the trustees of Neuberger Berman Equity Funds 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. # At cost, which approximates market value. ## At February 28, 2002, selected Fund information on a U.S. Federal income tax basis was as follows:
Net Gross Gross Unrealized Unrealized Unrealized Appreciation Neuberger Berman Cost Appreciation Depreciation (Depreciation) Century Fund $ 16,699,000 $ 1,216,000 $ 977,000 $ 239,000 Fasciano Fund 173,147,000 56,395,000 10,355,000 46,040,000 Focus Fund 1,490,585,000 542,380,000 138,751,000 403,629,000 Genesis Fund 3,087,750,000 862,469,000 69,962,000 792,507,000 Guardian Fund 2,398,560,000 277,340,000 138,356,000 138,984,000 International Fund 90,854,000 8,427,000 11,402,000 (2,975,000) Manhattan Fund 503,012,000 54,622,000 37,071,000 17,551,000 Millennium Fund 128,398,000 14,192,000 14,730,000 (538,000) Partners Fund 1,966,055,000 289,065,000 81,799,000 207,266,000 Regency Fund 36,616,000 3,263,000 472,000 2,791,000 Socially Responsive Fund 106,385,000 13,752,000 3,315,000 10,437,000 Technology Fund 7,773,000 380,000 729,000 (349,000)
* Non-income producing security. (S)All or a portion of this security is on loan (see Note A of Notes to Financial Statements). ++ Affiliated issuer (see Note E of Notes to Financial Statements). @ Neuberger Berman Institutional Cash Fund is also managed by Neuberger Berman Management Inc. (see Note A of Notes to Financial Statements). See Notes to Financial Statements 52 This page has been left blank intentionally 53 Statements of Assets and Liabilities
------------------- Neuberger Berman Equity Funds Century Fasciano (000's omitted except per share amounts) Fund Fund Assets Investments in securities, at market value* (Notes A & E)--see Schedule of Investments: Unaffiliated issuers $ 16,938 $219,187 Non-controlled affiliated issuers -- -- 16,938 219,187 Cash -- -- Dividends and interest receivable 13 105 Receivable for securities sold 542 1,828 Receivable for Fund shares sold 5 1,832 Receivable from administrator-net (Note B) 11 -- Prepaid expenses and other assets -- 4 Total Assets 17,509 222,956 Liabilities Payable for collateral on securities loaned (Note A) 1,654 8,953 Payable for securities purchased 445 -- Payable for Fund shares redeemed 2 320 Payable to investment manager (Note B) 6 127 Payable to administrator-net (Note B) -- 23 Accrued expenses and other payables 46 120 Total Liabilities 2,153 9,543 Net Assets at value $ 15,356 $213,413 Net Assets consist of: Paid-in capital $ 30,748 $170,503 Undistributed net investment income (loss) (77) (501) Accumulated net realized gains (losses) on investments (15,554) (2,629) Net unrealized appreciation (depreciation) in value of investments 239 46,040 Net Assets at value $ 15,356 $213,413 Net Assets Investor Class $ 15,356 $213,413 Trust Class -- -- Advisor Class -- -- Institutional Class -- -- Shares Outstanding ($.001 par value; unlimited shares authorized) Investor Class 2,454 6,199 Trust Class -- -- Advisor Class -- -- Institutional Class -- -- Net Asset Value, offering and redemption price per share Investor Class $ 6.26 $ 34.43 Trust Class -- -- Advisor Class -- -- Institutional Class -- -- *Cost of investments: Unaffiliated issuers $ 16,699 $173,147 Non-controlled affiliated issuers -- -- Total cost of investments $ 16,699 $173,147
See Notes to Financial Statements 54 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
---------------------------------------------------------------------------- Focus Genesis Guardian International Manhattan Millennium Fund Fund Fund Fund Fund Fund $1,564,636 $3,198,194 $2,537,544 $ 87,879 $ 520,563 $ 127,860 329,578 682,063 -- -- -- -- 1,894,214 3,880,257 2,537,544 87,879 520,563 127,860 -- -- -- 10 -- -- 1,073 2,063 3,906 197 67 -- 5,168 3,379 1,160 1,961 6,637 105 2,907 25,197 1,286 12 85 48 -- -- -- 1 -- -- 4 63 96 5 58 35 1,903,366 3,910,959 2,543,992 90,065 527,410 128,048 43,751 93,134 176,606 5,178 78,206 21,543 1,325 11,265 25,675 -- 7,985 165 2,181 9,882 5,412 5 4,260 497 672 1,829 791 53 179 71 438 926 530 -- 88 21 407 400 768 111 271 127 48,774 117,436 209,782 5,347 90,989 22,424 $1,854,592 $3,793,523 $2,334,210 $ 84,718 $ 436,421 $ 105,624 $1,446,464 $2,988,591 $2,230,881 $101,745 $ 775,731 $ 207,918 (245) (4,350) (1,108) (224) (1,661) (646) 4,744 16,775 (34,547) (13,827) (355,200) (101,110) 403,629 792,507 138,984 (2,976) 17,551 (538) $1,854,592 $3,793,523 $2,334,210 $ 84,718 $ 436,421 $ 105,624 $1,473,271 $1,105,970 $1,866,565 $ 83,535 $ 409,077 $ 98,973 361,013 1,999,810 446,580 1,183 25,491 6,651 20,308 252,802 21,065 -- 1,853 -- -- 434,941 -- -- -- -- 46,324 53,127 132,735 7,624 68,401 7,389 15,395 67,110 40,288 102 2,760 451 1,238 14,385 1,681 -- 191 -- -- 15,358 -- -- -- -- $ 31.80 $ 20.82 $ 14.06 $ 10.96 $ 5.98 $ 13.39 23.45 29.80 11.08 11.64 9.24 14.76 16.40 17.57 12.54 -- 9.70 -- -- 28.32 -- -- -- -- $1,306,244 $2,538,565 $2,398,560 $ 90,854 $ 503,012 $ 128,398 184,341 549,185 -- -- -- -- $1,490,585 $3,087,750 $2,398,560 $ 90,854 $ 503,012 $ 128,398
55 Statements of Assets and Liabilities cont'd
------------------------------------------ Partners Regency Socially Technology Neuberger Berman Equity Funds Fund Fund Responsive Fund (000's omitted except per share amounts) Fund Assets Investments in securities, at market value* (Notes A & E)--see Schedule of Investments: Unaffiliated issuers $2,173,321 $39,407 $116,822 $ 7,424 Non-controlled affiliated issuers -- -- -- -- 2,173,321 39,407 116,822 7,424 Cash -- -- 1 311 Dividends and interest receivable 1,101 74 54 -- Receivable for securities sold 10,325 1,373 -- 3 Receivable for Fund shares sold 906 14 677 2 Receivable from administrator-net (Note B) -- -- 10 -- Prepaid expenses and other assets 67 -- 5 -- Total Assets 2,185,720 40,868 117,559 7,750 Liabilities Payable for collateral on securities loaned (Note A) 117,759 266 3,887 518 Payable for securities purchased 7,791 602 1,127 2 Payable for Fund shares redeemed 15,487 56 121 1 Payable to investment manager (Note B) 715 16 45 5 Payable to administrator-net (Note B) 480 8 27 -- Accrued expenses and other payables 578 59 65 52 Total Liabilities 142,810 1,007 5,272 578 Net Assets at value $2,042,910 $39,861 $112,287 $ 7,172 Net Assets consist of: Paid-in capital $1,971,670 $38,012 $103,598 $ 26,216 Undistributed net investment income (loss) 2,990 41 (135) (85) Accumulated net realized gains (losses) on investments (139,016) (983) (1,613) (18,610) Net unrealized appreciation (depreciation) in value of investments 207,266 2,791 10,437 (349) Net Assets at value $2,042,910 $39,861 $112,287 $ 7,172 Net Assets Investor Class $1,573,345 $17,873 $ 82,183 $ 7,172 Trust Class 432,624 21,988 30,104 -- Advisor Class 36,941 -- -- -- Institutional Class -- -- -- -- Shares Outstanding ($.001 par value; unlimited shares authorized) Investor Class 77,915 1,530 4,755 2,353 Trust Class 27,796 2,156 2,521 -- Advisor Class 2,733 -- -- -- Institutional Class -- -- -- -- Net Asset Value, offering and redemption price per share Investor Class $ 20.19 $ 11.68 $ 17.28 $ 3.05 Trust Class 15.56 10.20 11.94 -- Advisor Class 13.52 -- -- -- Institutional Class -- -- -- -- *Cost of investments: Unaffiliated issuers $1,966,055 $36,616 $106,385 $ 7,773 Non-controlled affiliated issuers -- -- -- -- Total cost of investments $1,966,055 $36,616 $106,385 $ 7,773
See Notes to Financial Statements 56 This page has been left blank intentionally 57 Statements of Operations
----------------------------- Neuberger Berman Equity Funds Century Fasciano Focus (000's omitted) Fund Fund Fund Investment Income Income: Dividend income--unaffiliated issuers $ 44 $ 826 $ 7,692 Dividend income--non-controlled affiliated issuers -- -- 380 Interest income (Note A) 9 58 171 Foreign taxes withheld (Note A) -- (1) -- Total income 53 883 8,243 Expenses: Investment management fee (Note B) 48 806 4,527 Administration fee (Note B): Investor Class 23 142 1,958 Trust Class -- -- 741 Advisor Class -- -- 42 Institutional Class -- -- -- Distribution fees (Note B): Trust Class -- -- 186 Advisor Class -- -- 26 Shareholder servicing agent fees: Investor Class 25 151 469 Trust Class -- -- 10 Advisor Class -- -- 9 Institutional Class -- -- -- Auditing fees 8 21 25 Custodian fees (Note B) 20 57 192 Insurance expense -- 1 18 Legal fees 14 88 27 Registration and filing fees 40 35 82 Shareholder reports 13 42 115 Trustees' fees and expenses 21 12 22 Miscellaneous -- 29 39 Total expenses 212 1,384 8,488 Expenses reimbursed by administrator and/or reduced by custodian fee expense offset arrangement (Note B) (82) -- -- Total net expenses 130 1,384 8,488 Net investment income (loss) (77) (501) (245) Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investment securities sold in unaffiliated issuers (3,220) (2,578) 891 Net realized gain (loss) on investment securities sold in non-controlled affiliated issuers -- -- 7,471 Net realized gain (loss) on option contracts (Note A) -- -- -- Net realized gain (loss) on financial futures contracts (Note A) -- -- -- Net realized gain (loss) on foreign currency transactions (Note A) -- -- -- Change in net unrealized appreciation (depreciation) in value of: Investment securities (Note A) 2,802 12,198 (122,680) Financial futures contracts (Note A) -- -- -- Option contracts (Note A) -- -- -- Foreign currency contracts (Note A) -- -- -- Net gain (loss) on investments (418) 9,620 (114,318) Net increase (decrease) in net assets resulting from operations $ (495) $ 9,119 $(114,563)
--------- Neuberger Berman Equity Funds Genesis (000's omitted) Fund Investment Income Income: Dividend income--unaffiliated issuers $ 8,099 Dividend income--non-controlled affiliated issuers 2,629 Interest income (Note A) 2,251 Foreign taxes withheld (Note A) -- Total income 12,979 Expenses: Investment management fee (Note B) 10,807 Administration fee (Note B): Investor Class 1,280 Trust Class 3,232 Advisor Class 386 Institutional Class 277 Distribution fees (Note B): Trust Class -- Advisor Class 241 Shareholder servicing agent fees: Investor Class 438 Trust Class 13 Advisor Class 9 Institutional Class 8 Auditing fees 25 Custodian fees (Note B) 246 Insurance expense 22 Legal fees 19 Registration and filing fees 144 Shareholder reports 127 Trustees' fees and expenses 23 Miscellaneous 90 Total expenses 17,387 Expenses reimbursed by administrator and/or reduced by custodian fee expense offset arrangement (Note B) (58) Total net expenses 17,329 Net investment income (loss) (4,350) Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on investment securities sold in unaffiliated issuers 34,564 Net realized gain (loss) on investment securities sold in non-controlled affiliated issuers -- Net realized gain (loss) on option contracts (Note A) -- Net realized gain (loss) on financial futures contracts (Note A) -- Net realized gain (loss) on foreign currency transactions (Note A) -- Change in net unrealized appreciation (depreciation) in value of: Investment securities (Note A) 246,779 Financial futures contracts (Note A) -- Option contracts (Note A) -- Foreign currency contracts (Note A) -- Net gain (loss) on investments 281,343 Net increase (decrease) in net assets resulting from operations $276,993
See Notes to Financial Statements 58 NEUBERGER BERMAN FOR THE SIX MONTHS ENDED FEBRUARY 28, 2002 (UNAUDITED)
------------------------------------------------------------------------------------------------ Socially Guardian International Manhattan Millennium Partners Regency Responsive Technology Fund Fund Fund Fund Fund Fund Fund Fund $ 18,451 $ 518 $ 369 $ 70 $ 11,944 $ 295 $ 709 $ 1 -- -- -- -- -- -- -- -- 2,250 110 549 246 398 32 53 7 (24) (59) (7) -- (13) (1) (4) -- 20,677 569 911 316 12,329 326 758 8 5,501 380 1,303 494 4,865 99 307 39 2,451 115 589 142 2,066 20 108 12 965 3 57 14 861 42 57 -- 45 -- 4 -- 81 -- -- -- -- -- -- -- -- -- -- -- 241 -- -- 4 216 11 14 -- 28 -- 2 -- 50 -- -- -- 903 62 295 103 581 10 48 23 11 9 9 9 11 9 9 -- 8 -- 8 -- 9 -- -- -- -- -- -- -- -- -- -- -- 25 23 15 11 25 8 10 8 235 88 93 53 201 34 39 18 22 1 6 1 19 -- 1 -- 17 37 15 30 16 18 23 17 64 31 66 50 62 31 36 28 190 23 90 36 145 11 21 13 22 21 22 21 22 21 21 21 59 1 5 1 45 2 4 2 10,787 794 2,579 969 9,275 316 698 181 (1) (23) (7) (7) -- (43) -- (88) 10,786 771 2,572 962 9,275 273 698 93 9,891 (202) (1,661) (646) 3,054 53 60 (85) 28,175 (7,819) (67,973) (7,385) (134,716) (799) (894) (2,029) -- -- -- -- -- -- -- -- 2,930 -- -- -- -- -- -- -- (34,135) (144) -- -- -- -- -- -- -- (1,738) -- -- -- -- -- -- (59,214) 3,561 24,561 (27) 139,095 1,000 1,137 855 17,896 75 -- -- -- -- -- -- (181) -- -- -- -- -- -- -- -- (418) -- -- -- -- -- -- (44,529) (6,483) (43,412) (7,412) 4,379 201 243 (1,174) $(34,638) $(6,685) $(45,073) $(8,058) $ 7,433 $ 254 $ 303 $(1,259)
59 Statements of Changes in Net Assets
CENTURY FUND ------------------------ Neuberger Berman Equity Funds Six Months (000's omitted) Ended Year February 28, Ended 2002 August 31, (Unaudited) 2001 Increase (Decrease) in Net Assets: From Operations: Net investment income (loss) $ (77) $ (248) Net realized gain (loss) on investments (3,220) (9,846) Change in net unrealized appreciation (depreciation) of investments 2,802 (12,266) Net increase (decrease) in net assets resulting from operations (495) (22,360) Distributions to Shareholders From: Net investment income: Investor Class -- -- Trust Class -- -- Advisor Class -- -- Institutional Class -- -- Net realized gain on investments: Investor Class -- -- Trust Class -- -- Advisor Class -- -- Institutional Class -- -- Tax return of capital: Investor Class -- -- Trust Class -- -- Total distributions to shareholders -- -- From Fund Share Transactions: Proceeds from shares sold: Investor Class 1,995 8,222 Trust Class -- 12 Advisor Class -- -- Institutional Class -- -- Proceeds from reinvestment of dividends and distributions: Investor Class -- -- Trust Class -- -- Advisor Class -- -- Institutional Class -- -- Payments for shares redeemed: Investor Class (3,646) (13,049) Trust Class (1,046) (78) Advisor Class -- -- Institutional Class -- -- Net increase (decrease) from Fund share transactions (2,697) (4,893) Effect of Tax-Free Reorganization -- -- Net Increase (Decrease) in Net Assets (3,192) (27,253) Net Assets: Beginning of period 18,548 45,801 End of period $15,356 $ 18,548 Accumulated undistributed net investment income (loss) at end of period $ (77) $ --
See Notes to Financial Statements 60 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
FASCIANO FUND FOCUS FUND GENESIS FUND ------------------------------------------------------------------------------------- Six Months Six Months Six Months Ended Two Months Year Ended Year Ended Year February 28, Ended Ended February 28, Ended February 28, Ended 2002 August 31, June 30, 2002 August 31, 2002 August 31, (Unaudited) 2001 2001 (Unaudited) 2001 (Unaudited) 2001 $ (501) $ (366) $ (896) $ (245) $ (2,854) $ (4,350) $ (1,823) (2,578) 507 15,384 8,362 147,258 34,564 103,191 12,198 (2,983) (2,141) (122,680) (664,363) 246,779 231,540 9,119 (2,842) 12,347 (114,563) (519,959) 276,993 332,908 -- -- (2,097) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (578) (6,233) -- (1) (105,474) (168,047) (29,209) (43,578) -- -- -- (26,034) (18,127) (48,682) (35,534) -- -- -- (1,422) -- (5,717) (9,837) -- -- -- -- -- (10,829) (23,024) -- -- -- -- -- -- -- -- -- -- -- -- -- -- (6,233) -- (2,098) (132,930) (186,174) (94,437) (112,551) 25,583 11,446 127,940 106,019 364,697 211,727 383,569 -- -- -- 76,020 326,478 605,283 1,030,956 -- -- -- 7,380 27,540 104,046 92,237 -- -- -- -- -- 86,193 120,791 6,090 -- 2,017 93,400 147,363 27,945 41,689 -- -- -- 25,815 12,627 46,184 30,015 -- -- -- 1,377 -- 5,613 9,805 -- -- -- -- -- 10,760 23,602 (24,407) (15,902) (196,549) (148,837) (299,406) (165,936) (278,683) -- -- -- (89,195) (201,679) (265,856) (422,781) -- -- -- (7,373) (17,990) (38,715) (38,588) -- -- -- -- -- (42,070) (38,054) 7,266 (4,456) (66,592) 64,606 359,630 585,174 954,558 -- -- -- -- -- -- -- 10,152 (7,298) (56,343) (182,887) (346,503) 767,730 1,174,915 203,261 210,559 266,902 2,037,479 2,383,982 3,025,793 1,850,878 $213,413 $203,261 $ 210,559 $1,854,592 $2,037,479 $3,793,523 $3,025,793 $ (501) $ -- $ -- $ (245) $ -- $ (4,350) $ --
61 Statements of Changes in Net Assets cont'd
CENTURY FUND ----------------------- Neuberger Berman Equity Funds Six Months (000's omitted) Ended Year February 28, Ended 2002 August 31, (Unaudited) 2001 Number of Fund Shares: Sold: Investor Class 304 828 Trust Class -- 1 Advisor Class -- -- Institutional Class -- -- Issued on reinvestment of dividends and distributions: Investor Class -- -- Trust Class -- -- Advisor Class -- -- Institutional Class -- -- Redeemed: Investor Class (550) (1,374) Trust Class (154) (9) Advisor Class -- -- Institutional Class -- -- Net increase (decrease) in shares outstanding (400) (554)
See Notes to Financial Statements 62 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
FASCIANO FUND FOCUS FUND GENESIS FUND ---------------------------------------------------------------------------------- Six Months Six Months Six Months Ended Two Months Year Ended Year Ended Year February 28, Ended Ended February 28, Ended February 28, Ended 2002 August 31, June 30, 2002 August 31, 2002 August 31, (Unaudited) 2001 2001 (Unaudited) 2001 (Unaudited) 2001 775 335 3,747 3,126 8,679 10,880 20,144 -- -- -- 3,041 10,718 21,388 37,499 -- -- -- 469 1,254 6,266 5,627 -- -- -- -- -- 3,195 4,643 189 -- 62 2,775 4,028 1,426 2,418 -- -- -- 1,040 466 1,647 1,215 -- -- -- 79 -- 339 671 -- -- -- -- -- 403 1,009 (756) (467) (5,885) (4,407) (7,324) (8,646) (14,712) -- -- -- (3,622) (6,788) (9,588) (15,471) -- -- -- (419) (790) (2,370) (2,396) -- -- -- -- -- (1,549) (1,477) 208 (132) (2,076) 2,082 10,243 23,391 39,170
63 Statements of Changes in Net Assets cont'd
GUARDIAN FUND -------------------------- Neuberger Berman Equity Funds Six Months (000's omitted) Ended Year February 28, Ended 2002 August 31, (Unaudited) 2001 Increase (Decrease) in Net Assets: From Operations: Net investment income (loss) $ 9,891 $ 24,397 Net realized gain (loss) on investments (3,030) 122,010 Change in net unrealized appreciation (depreciation) of investments (41,499) (622,168) Net increase (decrease) in net assets resulting from operations (34,638) (475,761) Distributions to Shareholders From: Net investment income: Investor Class (9,611) (17,542) Trust Class (2,342) (5,875) Advisor Class (74) (56) Institutional Class -- -- Net realized gain on investments: Investor Class -- (390,973) Trust Class -- (130,338) Advisor Class -- (1,225) Institutional Class -- -- Tax return of capital: Investor Class -- -- Trust Class -- -- Total distributions to shareholders (12,027) (546,009) From Fund Share Transactions: Proceeds from shares sold: Investor Class 48,638 131,140 Trust Class 36,845 172,157 Advisor Class 1,045 3,178 Institutional Class -- -- Proceeds from reinvestment of dividends and distributions: Investor Class 8,910 383,676 Trust Class 2,314 135,496 Advisor Class 74 1,280 Institutional Class -- -- Payments for shares redeemed: Investor Class (156,285) (472,209) Trust Class (135,930) (585,474) Advisor Class (3,735) (2,848) Institutional Class -- -- Net increase (decrease) from Fund share transactions (198,124) (233,604) Effect of Tax-Free Reorganization -- -- Net Increase (Decrease) in Net Assets (244,789) (1,255,374) Net Assets: Beginning of period 2,578,999 3,834,373 End of period $2,334,210 $ 2,578,999 Accumulated undistributed net investment income (loss) at end of period $ (1,108) $ 1,028
See Notes to Financial Statements 64 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
INTERNATIONAL FUND MANHATTAN FUND MILLENNIUM FUND ------------------------------------------------------------------------- Six Months Six Months Six Months Ended Year Ended Year Ended Year February 28, Ended February 28, Ended February 28, Ended 2002 August 31, 2002 August 31, 2002 August 31, (Unaudited) 2001 (Unaudited) 2001 (Unaudited) 2001 $ (202) $ 416 $ (1,661) $ (4,383) $ (646) $ (1,973) (9,701) 1,535 (67,973) (286,302) (7,385) (93,927) 3,218 (43,441) 24,561 (355,740) (27) (55,214) (6,685) (41,490) (45,073) (646,425) (8,058) (151,114) (159) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (318) (33,077) (3,731) (287,829) -- (40,338) (4) (579) (217) (21,155) -- (1,121) -- -- (14) (799) -- -- -- -- -- -- -- -- -- -- -- -- -- (52) -- -- -- -- -- -- (481) (33,656) (3,962) (309,783) -- (41,511) 13,221 71,930 71,955 233,963 87,238 138,308 1,326 4,499 8,361 53,891 2,202 3,301 -- -- 498 2,123 -- 43 -- -- -- -- -- -- 448 31,110 3,536 265,998 -- 39,347 4 476 216 21,104 -- 1,095 -- -- 13 795 -- -- -- -- -- -- -- -- (21,269) (124,848) (138,217) (291,278) (98,731) (192,929) (1,880) (5,743) (12,161) (98,918) (2,871) (5,731) -- -- (238) (2,611) -- (176) -- -- -- -- -- -- (8,150) (22,576) (66,037) 185,067 (12,162) (16,742) -- -- -- -- -- -- (15,316) (97,722) (115,072) (771,141) (20,220) (209,367) 100,034 197,756 551,493 1,322,634 125,844 335,211 $ 84,718 $ 100,034 $ 436,421 $ 551,493 $105,624 $ 125,844 $ (224) $ 137 $ (1,661) $ -- $ (646) $ --
65 Statements of Changes in Net Assets cont'd
GUARDIAN FUND ------------------------ Neuberger Berman Equity Funds Six Months (000's omitted) Ended Year February 28, Ended 2002 August 31, (Unaudited) 2001 Number of Fund Shares: Sold: Investor Class 3,478 8,272 Trust Class 3,348 13,857 Advisor Class 85 232 Institutional Class -- -- Issued on reinvestment of dividends and distributions: Investor Class 668 26,584 Trust Class 221 11,908 Advisor Class 6 100 Institutional Class -- -- Redeemed: Investor Class (11,240) (29,235) Trust Class (12,541) (47,323) Advisor Class (298) (210) Institutional Class -- -- Net increase (decrease) in shares outstanding (16,273) (15,815)
See Notes to Financial Statements 66 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
INTERNATIONAL FUND MANHATTAN FUND MILLENNIUM FUND ------------------------------------------------------------------------ Six Months Six Months Six Months Ended Year Ended Year Ended Year February 28, Ended February 28, Ended February 28, Ended 2002 August 31, 2002 August 31, 2002 August 31, (Unaudited) 2001 (Unaudited) 2001 (Unaudited) 2001 1,196 4,489 11,647 26,231 6,192 7,982 112 262 871 3,064 145 163 -- -- 50 131 -- 5 -- -- -- -- -- -- 40 2,230 540 27,282 -- 2,310 -- 32 22 1,401 -- 58 -- -- 1 50 -- -- -- -- -- -- -- -- (1,927) (7,709) (21,898) (31,500) (7,024) (10,831) (157) (336) (1,257) (6,669) (192) (294) -- -- (23) (219) -- (26) -- -- -- -- -- -- (736) (1,032) (10,047) 19,771 (879) (633)
67 Statements of Changes in Net Assets cont'd
PARTNERS FUND ------------------------- Neuberger Berman Equity Funds Six Months (000's omitted) Ended Year February 28, Ended 2002 August 31, (Unaudited) 2001 Increase (Decrease) in Net Assets: From Operations: Net investment income (loss) $ 3,054 $ 7,700 Net realized gain (loss) on investments (134,716) 43,010 Change in net unrealized appreciation (depreciation) of investments 139,095 (307,872) Net increase (decrease) in net assets resulting from operations 7,433 (257,162) Distributions to Shareholders From: Net investment income: Investor Class (6,328) (14,171) Trust Class (833) (3,514) Advisor Class -- (33) Institutional Class -- -- Net realized gain on investments: Investor Class (30,058) (160,887) Trust Class (8,055) (31,944) Advisor Class (742) (2,275) Institutional Class -- -- Tax return of capital: Investor Class -- -- Trust Class -- -- Total distributions to shareholders (46,016) (212,824) From Fund Share Transactions: Proceeds from shares sold: Investor Class 26,689 60,192 Trust Class 53,144 125,110 Advisor Class 7,553 8,166 Institutional Class -- -- Proceeds from reinvestment of dividends and distributions: Investor Class 34,928 167,973 Trust Class 8,835 35,188 Advisor Class 741 2,306 Institutional Class -- -- Payments for shares redeemed: Investor Class (148,203) (359,034) Trust Class (84,048) (228,970) Advisor Class (13,681) (13,393) Institutional Class -- -- Net increase (decrease) from Fund share transactions (114,042) (202,462) Effect of Tax-Free Reorganization -- -- Net Increase (Decrease) in Net Assets (152,625) (672,448) Net Assets: Beginning of period 2,195,535 2,867,983 End of period $2,042,910 $2,195,535 Accumulated undistributed net investment income (loss) at end of period $ 2,990 $ 7,097
See Notes to Financial Statements 68 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
REGENCY FUND SOCIALLY RESPONSIVE FUND TECHNOLOGY FUND ------------------------------------------------------------------------ Six Months Six Months Six Months Ended Year Ended Year Ended Year February 28, Ended February 28, Ended February 28, Ended 2002 August 31, 2002 August 31, 2002 August 31, (Unaudited) 2001 (Unaudited) 2001 (Unaudited) 2001 $ 53 $ (19) $ 60 $ 3 $ (85) $ (256) (799) 5,103 (894) 11,077 (2,029) (16,727) 1,000 (3,451) 1,137 (29,836) 855 (5,715) 254 1,633 303 (18,756) (1,259) (22,698) (12) -- (260) -- -- -- (19) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (1,742) (702) (7,457) -- -- (52) (2,421) (4,771) (2,608) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (4,194) (5,473) (10,325) -- -- (52) 5,166 13,629 8,217 16,025 4,193 18,878 119 3,050 5,071 9,145 1 256 -- -- -- 76 -- -- -- -- -- -- -- -- 1,694 696 7,454 -- -- 49 2,438 4,669 2,568 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (3,567) (9,138) (13,837) (25,750) (4,720) (11,047) (3,495) (3,578) (3,291) (6,805) (938) (2) -- -- -- (331) -- -- -- -- -- -- -- -- 2,355 9,328 6,182 (7,640) (1,464) 8,134 -- -- -- 5,687 -- -- (1,585) 5,488 (3,840) (20,709) (2,723) (14,616) 41,446 35,958 116,127 136,836 9,895 24,511 $39,861 $41,446 $112,287 $116,127 $ 7,172 $ 9,895 $ 41 $ 19 $ (135) $ 65 $ (85) $ --
69 Statements of Changes in Net Assets cont'd
PARTNERS FUND ------------------------ Neuberger Berman Equity Funds Six Months (000's omitted) Ended Year February 28, Ended 2002 August 31, (Unaudited) 2001 Number of Fund Shares: Sold: Investor Class 1,334 2,732 Trust Class 3,429 7,363 Advisor Class 554 559 Institutional Class -- -- Issued on reinvestment of dividends and distributions: Investor Class 1,742 8,053 Trust Class 571 2,188 Advisor Class 55 165 Institutional Class -- -- Redeemed: Investor Class (7,398) (16,117) Trust Class (5,484) (13,497) Advisor Class (1,019) (921) Institutional Class -- -- Net increase (decrease) in shares outstanding (6,216) (9,475)
See Notes to Financial Statements 70 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
REGENCY FUND SOCIALLY RESPONSIVE FUND TECHNOLOGY FUND ------------------------------------------------------------------------ Six Months Six Months Six Months Ended Year Ended Year Ended Year February 28, Ended February 28, Ended February 28, Ended 2002 August 31, 2002 August 31, 2002 August 31, (Unaudited) 2001 (Unaudited) 2001 (Unaudited) 2001 441 1,054 462 798 1,252 2,636 12 250 400 656 -- 37 -- -- -- 8 -- -- -- -- -- -- -- -- 152 56 424 -- -- 6 251 429 211 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (303) (707) (760) (1,287) (1,397) (1,956) (358) (333) (259) (484) (241) -- -- -- -- (35) -- -- -- -- -- -- -- -- 195 749 478 (344) (386) 723
71 Notes to Financial Statements Equity Funds Note A--Summary of Significant Accounting Policies: 1 General: Neuberger Berman Equity Funds (the "Trust") is a Delaware business trust organized pursuant to a Trust Instrument dated December 23, 1992. The Trust is registered as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), and its shares are registered under the Securities Act of 1933, as amended (the "1933 Act"). The Trust is comprised of the following twelve separate operating series: Neuberger Berman Century Fund ("Century"), Neuberger Berman Fasciano Fund ("Fasciano"), Neuberger Berman Focus Fund ("Focus"), Neuberger Berman Genesis Fund ("Genesis"), Neuberger Berman Guardian Fund ("Guardian"), Neuberger Berman International Fund ("International"), Neuberger Berman Manhattan Fund ("Manhattan"), Neuberger Berman Millennium Fund ("Millennium"), Neuberger Berman Partners Fund ("Partners"), Neuberger Berman Regency Fund ("Regency"), Neuberger Berman Socially Responsive Fund ("Socially Responsive"), and Neuberger Berman Technology Fund ("Technology") (individually a "Fund," collectively, the "Funds"). All of the Funds offer Investor Class shares, nine offer Trust Class shares, five offer Advisor Class shares, and one offers Institutional Class shares. The Investor Class of Fasciano had no operations until March 24, 2001, other than matters relating to its organization and registration as a diversified, open-end management investment company under the 1940 Act, and registration of its shares under the 1933 Act. The trustees of the Trust may establish additional series or classes of shares without the approval of shareholders. The assets of each Fund belong only to that Fund, and the liabilities of each Fund are borne solely by that Fund and no other. Through the close of business on December 15, 2000, each Fund (except Fasciano) was organized as a "feeder" fund in a "master-feeder" structure. Accordingly, each Fund (except Fasciano) invested its assets in a corresponding Portfolio of Equity Managers Trust ("Portfolios") (Global Managers Trust, with respect to International Fund) sponsored by Neuberger Berman Management Inc. ("Management"), having the same investment objective and policies as the respective Fund. In addition, other regulated investment companies sponsored by Management simultaneously invested in the Portfolios. After the close of business on December 15, 2000, in a tax-free reorganization, each Fund (except Fasciano) redeemed its interest, in kind, in its corresponding Portfolio and re-designated all its outstanding shares as Investor Class Shares. Each Fund (except Fasciano) also created additional classes of shares (Trust Class, and, for certain Funds, Advisor Class and Institutional Class), which were exchanged for assets of the various series of Neuberger Berman Equity Trust, Neuberger Berman Equity Assets, and Neuberger Berman Equity Series, respectively, also on a tax-free basis. These transactions resulted in the conversion of the "master-feeder" structure to a multiple class structure. The reorganization, which represented a change in corporate form, had no effect on the net assets or net asset value per share of the Funds and is accounted for by combining the net assets and results of operations of all of the former feeders contributing to the master portfolio as new classes, which along with the 72 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Investor Class and Fasciano, constitute the Funds. The effect of the reorganization on the paid-in-capital of the Funds is shown in the Statements of Changes in Net Assets. Immediately following the reorganization, the investment objectives, policies and limitations of each Fund (except Fasciano) were identical to those of its corresponding Portfolio under the prior master/feeder structure (except as approved by shareholders), and the shareholders' indirect interest in the assets of each corresponding Portfolio has not changed as a result of this reorganization. After the close of business on March 23, 2001, Fasciano acquired all of the assets and assumed all of the liabilities of the Fasciano Fund, Inc. (the "Predecessor"), a Maryland corporation which commenced operations on August 1, 1987 as a private investment company, and registered with the Securities and Exchange Commission on June 30, 1988 as a diversified, open-end management investment company. The acquisition was pursuant to an Agreement and Plan of Reorganization approved by the Predecessor's shareholders on March 15, 2001. The acquisition was treated as a tax-free reorganization and accordingly, any unrealized appreciation or depreciation on the securities on the date of the acquisition was treated as a non-taxable event by the Predecessor. As such, Fasciano's basis in the securities acquired reflected their historical cost basis as of the date of transfer. The net assets and net unrealized appreciation of the Predecessor as of March 23, 2001, were $186,409,744 and $5,737,684, respectively. Effective August 31, 2001, Fasciano changed its fiscal year end from June 30 to August 31. The investment objectives, policies, and limitations of the Predecessor are substantially identical to those of Fasciano. For financial reporting purposes, the Predecessor's operating history prior to the acquisition is reflected in the financial statements and financial highlights of the Fund. Certain prior year financial statement items have been reclassified to conform to the current period presentation. The preparation of financial statements in accordance with generally accepted accounting principles requires Management to make estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. 2 Portfolio valuation: Investment securities are valued as indicated in the notes following the Funds' Schedule of Investments. 3 Foreign currency translation: The accounting records of the Funds 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. 73 Notes to Financial Statements Equity Funds cont'd 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 Fund becomes aware of the dividends. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, including accretion of original issue discount, where applicable, and accretion of discount on short-term investments, is recorded on the accrual basis. Realized gains and losses from securities transactions and foreign currency transactions are recorded on the basis of identified cost and stated separately in the Statements of Operations. 5 Federal income taxes: The Funds are treated as separate entities for U.S. Federal income tax purposes. It is the policy of each Fund to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of investment company taxable income and net capital gains (after reduction for any amounts available for U.S. Federal income tax purposes as capital loss carryforwards) sufficient to relieve it from all, or substantially all, U.S. Federal income taxes. Accordingly, each Fund paid no U.S. Federal income taxes and no provision for U.S. Federal income taxes was required. 6 Foreign taxes: Foreign taxes withheld represent amounts withheld by foreign tax authorities, net of refunds recoverable. 7 Dividends and distributions to shareholders: Each Fund may earn income, net of expenses, daily on its investments. Income dividends and distributions from net realized capital gains, if any, are normally distributed in December. Guardian generally distributes substantially all of its net investment income, if any, at the end of each calendar quarter. Income dividends and capital gain distributions to shareholders are recorded on the ex-dividend date. To the extent each Fund's net realized capital gains, if any, can be offset by capital loss carryforwards ($2,554,648 expiring in 2008 and $1,582,084 expiring in 2009 for Century, and $27,997,365 and $685,257 expiring in 2009 for Millennium and Technology, respectively, determined as of August 31, 2001), 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 in the components of net assets on the Statements of Assets and Liabilities. 8 Expense allocation: Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributed to a Fund are allocated, on the basis of relative net assets, except where a more appropriate allocation of expenses to each of the Funds can otherwise be made fairly. Each Fund's expenses (other than those specific to each class) are allocated proportionally each day between the classes based upon the relative net assets of each class. 74 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) 9 Call options: Premiums received by each Fund upon writing a covered call option are recorded in the liability section of each Fund's Statement of Assets and Liabilities and are subsequently adjusted to the current market value. When an option is exercised, closed, or expired, the Fund realizes a gain or loss and the liability is eliminated. A Fund 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, 2002:
Number Value When Guardian Written Contracts outstanding 8/31/01 4,794 $ 1,766,000 Contracts written 10,072 3,270,000 Contracts expired (3,168) (303,000) Contracts exercised 0 0 Contracts closed (11,698) (4,733,000) ------- ----------- Contracts outstanding 2/28/02 0 $ 0 ------- -----------
10 Financial futures contracts: Each Fund may buy and sell stock index futures contracts for purposes of managing cash flow. Century, Fasciano, International, Millennium, Socially Responsive, and Technology may each buy and sell financial futures contracts to hedge against a possible decline in the value of their portfolio securities. International may also buy currency futures contracts for non-hedging purposes. At the time a Fund enters into a financial futures contract, it is required to deposit with its custodian a specified amount of cash or liquid securities, known as "initial margin," ranging upward from 1.1% of the value of the financial futures contract being traded. Each day, the futures contract is valued at the official settlement price of the board of trade or U.S. commodity exchange on which such futures contract is traded. Subsequent payments, known as "variation margin," to and from the broker are made on a daily basis as the market price of the financial futures contract fluctuates. Daily variation margin adjustments, arising from this "mark to market," are recorded by the Funds as unrealized gains or losses. Although some financial futures contracts by their terms call for actual delivery or acceptance of financial instruments, in most cases the contracts are closed out prior to delivery by offsetting purchases or sales of matching financial futures contracts. When the contracts are closed, a Fund recognizes a gain or loss. Risks of entering into futures contracts include the possibility there may be an illiquid market and/or a change in the value of the contract may not correlate with changes in the value of the underlying securities. For U.S. Federal income tax purposes, the futures transactions undertaken by a Fund may cause that Fund to recognize gains or losses from marking to market even though its positions have not been sold or terminated, may affect the character of the gains or losses recognized as long-term or short-term, and may affect the timing of some capital gains and losses realized by the Fund. Also, a Fund's losses on trans- 75 Notes to Financial Statements Equity Funds cont'd actions involving futures contracts may be deferred rather than being taken into account currently in calculating such Fund's taxable income. During the six months ended February 28, 2002, Century, Fasciano, Focus, Genesis, Manhattan, Millennium, Partners, Regency, Socially Responsive, and Technology did not enter into any financial futures contracts. During the six months ended February 28, 2002, Guardian and International entered into various financial futures contracts. At February 28, 2002, there were no open positions. 11 Forward foreign currency contracts: The Funds may enter into forward foreign currency contracts ("contracts") in connection with planned purchases or sales of securities to hedge the U.S. dollar value of portfolio securities denominated in a foreign currency. International may also enter into such contracts to increase or decrease its exposure to a currency other than U.S. dollars. The gain or loss arising from the difference between the original contract price and the closing price of such contract is included in net realized gains or losses on foreign currency transactions. Fluctuations in the value of forward foreign currency contracts are recorded for financial reporting purposes as unrealized gains or losses by each Fund. The Funds have no specific limitation on the percentage of assets which may be committed to these types of contracts. The Funds could be exposed to risks if a counterparty to a contract were unable to meet the terms of its contract or if the value of the foreign currency changes unfavorably. The U.S. dollar value of foreign currency underlying all contractual commitments held by each Fund is determined using forward foreign currency exchange rates supplied by an independent pricing service. 12 Security lending: Securities loans involve certain risks in the event a borrower should fail financially, including delays or inability to recover the lent securities or foreclose against the collateral. The investment manager, under the general supervision of the Trust's Board of Trustees, monitors the creditworthiness of the parties to whom the Funds make security loans. The Funds will not lend securities on which covered call options have been written, or lend securities on terms which would prevent the Funds from qualifying as regulated investment companies. The Funds entered into a Securities Lending Agreement with Morgan Stanley & Co. Incorporated ("Morgan"). The Funds receive cash collateral equal to at least 100% of the current market value of the loaned securities. The Funds invest the cash collateral in the N&B Securities Lending Quality Fund, LLC ("investment vehicle"), which is managed by State Street Bank and Trust Company ("State Street") pursuant to guidelines approved by the Trust's investment manager. Income earned on the investment vehicle is paid to Morgan monthly. The Funds receive a fee, payable monthly, negotiated by the Funds and Morgan, based on the number and duration of the lending transactions. This income is reflected in the Statements of Operations under the caption Interest income. 76 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) The following table shows the value of the securities loaned and the value of the collateral at February 28, 2002, and the income earned on loaned securities during the six months ended February 28, 2002:
Value of Securities Value of Income Earned on Loaned Collateral Loaned Securities Century $ 1,621,000 $ 1,654,000 $ 2,000 Fasciano 8,778,000 8,953,000 18,000 Focus 42,893,000 43,751,000 113,000 Genesis 91,308,000 93,134,000 113,000 Guardian 173,143,000 176,606,000 213,000 International 5,076,000 5,178,000 20,000 Manhattan 76,672,000 78,206,000 375,000 Millennium 21,121,000 21,543,000 213,000 Partners 115,450,000 117,759,000 150,000 Regency 261,000 266,000 5,000 Socially Responsive 3,810,000 3,887,000 9,000 Technology 508,000 518,000 1,000
13 Repurchase agreements: Each Fund may enter into repurchase agreements with institutions that the Fund's investment manager has determined are creditworthy. Each repurchase agreement is recorded at cost. A Fund requires that the securities purchased in a repurchase transaction be transferred to the custodian in a manner sufficient to enable a Fund to obtain those securities in the event of a default under the repurchase agreement. A Fund 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 Fund under each such repurchase agreement. 14 Redemption of fund shares: The Investor and Trust Classes of International and the Investor Class of Technology each charge a 2% redemption fee on shares redeemed or exchanged for shares of another fund within 180 days or less of the purchase date. All redemption fees are paid to and recorded by each class as Paid-in capital. For the six months ended February 28, 2002, the Investor and Trust Classes of International and the Investor Class of Technology received $178,488, $475 and $7,984, respectively, in redemption fees. 15 Income recognition: In November 2000 the American Institute of Certified Public Accountants ("AICPA") issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). The Guide became effective for annual financial statements issued for fiscal years beginning after December 15, 2000. The adoption of the Guide did not have a significant effect on the Funds' financial statements. 16 Affiliated transactions: Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Funds may invest in the Neuberger Berman Institutional Cash Fund (the "Cash Fund"), an affiliated fund managed by Management. The Cash Fund seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The Funds do not pay Management an investment management fee associated with their investment in the Cash Fund. Income earned on the investment is reflected in the Statements of Operations under the caption Interest 77 Notes to Financial Statements Equity Funds cont'd income. The following table shows the income earned on this investment during the six months ended February 28, 2002:
Income Earned on the Cash Fund Century $ 7,000 Fasciano 40,000 Focus 42,000 Genesis 2,124,000 Guardian 1,909,000 International 90,000 Manhattan 173,000 Millennium 33,000 Partners 247,000 Regency 27,000 Socially Responsive 0 Technology 6,000
17 Other: All net investment income and realized and unrealized capital gains and losses of each Fund are allocated pro rata among its respective classes. Note B--Management Fees, Administration Fees, Distribution Arrangements, and Other Transactions With Affiliates: Each Fund retains Management as its investment manager under a Management Agreement. For such investment management services, each Fund pays Management a fee according to the following table: Investment Management Fee as a Percentage of Average Daily Net Assets:
First Next Next Next Next Next Next Next $250 $250 $250 $250 $500 $500 $500 $1.5 million million million million million million million billion Thereafter Century 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% Fasciano 0.85% 0.85% 0.825% 0.825% 0.80% 0.775% 0.75% 0.725% 0.725% Focus 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% Genesis 0.85% 0.80% 0.75% 0.70% 0.65% 0.65% 0.65% 0.65% 0.65% Guardian 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% International 0.85% 0.825% 0.80% 0.775% 0.75% 0.725% 0.725% 0.70% 0.70% Manhattan 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% Millennium 0.85% 0.80% 0.75% 0.70% 0.65% 0.65% 0.65% 0.65% 0.65% Partners 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% Regency 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% Socially Responsive 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% 0.425% 0.425% 0.40% Technology 0.85% 0.85% 0.825% 0.825% 0.80% 0.775% 0.75% 0.725% 0.725%
78 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Prior to June 7, 2001, each Fund paid Management a fee according to the following table: Investment Management Fee as a Percentage of Average Daily Net Assets:
First Next Next Next Next $250 $250 $250 $250 $500 million million million million million Thereafter Century 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% Fasciano 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% Focus 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% Genesis 0.85% 0.80% 0.75% 0.70% 0.65% 0.65% Guardian 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% International 0.85% 0.825% 0.80% 0.775% 0.75% 0.725% Manhattan 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% Millennium 0.85% 0.80% 0.75% 0.70% 0.65% 0.65% Partners 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% Regency 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% Socially Responsive 0.55% 0.525% 0.50% 0.475% 0.45% 0.425% Technology 0.85% 0.85% 0.85% 0.85% 0.85% 0.85%
Each Fund retains Management as its administrator under an Administration Agreement ("Agreement"). Pursuant to this Agreement each Fund's Investor Class (except Fasciano) pays Management an administration fee at the annual rate of 0.26% of its average daily net assets, each Fund's Trust Class and Advisor Class pays Management an administration fee at the annual rate of 0.40% of its average daily net assets, and the Investor Class of Fasciano and the Institutional Class of Genesis pay Management an administration fee at the annual rate of 0.15% of its average daily net assets. Additionally, Management retains State Street as its sub-administrator under a Sub-Administration Agreement. Management pays State Street a fee for all services received under the agreement. Fasciano Company, Inc. acted as the investment adviser to Fasciano's Predecessor, from its inception through March 23, 2001, and was paid 1.00% of the average daily net assets for management and administration services. For the Trust Class of Focus, Guardian, Millennium, Partners, Regency and Socially Responsive, and the Advisor Class of each Fund, Management acts as agent in arranging for the sale of class shares without commission and bears advertising and promotion expenses. The trustees of the Trust have adopted plans (each a "Plan") with respect to these classes, pursuant to Rule 12b-1 under the 1940 Act. The Plans provide that, as compensation for administrative and other services provided to these classes, Management's activities and expenses related to the sale and distribution of these classes of shares, and ongoing services provided to investors in these classes, Management receives from each of these classes a fee at the annual rate of 0.10% of such Trust Class' and 0.25% of such Advisor Class' average daily net assets. Management receives this amount to provide distribution and shareholder servicing for those classes and pays a portion of it to institutions that provide such services. 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 class during any year may be more or less than the cost of distribution and other services provided to that class. 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 Plans comply with those rules. 79 Notes to Financial Statements Equity Funds cont'd Management has undertaken to reimburse operating expenses (including fees payable to Management but excluding interest, taxes, brokerage commissions and extraordinary expenses) ("Operating Expenses") which exceed the expense limitation as detailed in the following table:
Reimbursement from Management for the Six Expense Months Ended Class Limitation/(1)/ Contractual/Voluntary Expiration February 28, 2002 Century Fund Investor Class 1.50% Contractual 12/31/11 74,358 Focus Fund Trust Class 1.50% Contractual 12/31/04 -- Focus Fund Advisor Class 1.50% Contractual 12/31/13 -- Genesis Fund Trust Class 1.50% Contractual 12/31/04 -- Genesis Fund Advisor Class 1.50% Contractual 12/31/13 -- Genesis Fund Institutional Class 0.85% Contractual 12/31/13 52,702 Guardian Fund Trust Class 1.50% Contractual 12/31/04 -- Guardian Fund Advisor Class 1.50% Contractual 12/31/13 -- International Fund Investor Class 1.70% Contractual 12/31/04 16,420 International Fund Trust Class 2.00% Contractual 12/31/11 6,834 Manhattan Fund Trust Class 1.50% Contractual 12/31/04 -- Manhattan Fund Advisor Class 1.50% Contractual 12/31/13 6,724 Millennium Fund Investor Class 1.75% Contractual 12/31/04 -- Millennium Fund Trust Class 1.75% Contractual 12/31/13 6,704 Partners Fund Trust Class 1.50% Contractual 12/31/04 -- Partners Fund Advisor Class 1.50% Contractual 12/31/13 -- Regency Fund Investor Class 1.50% Contractual 12/31/11 9,771 Regency Fund Trust Class 1.50% Contractual 12/31/11 32,874 Socially Responsive Fund Trust Class 1.50% Contractual 12/31/04 -- Technology Fund Investor Class 2.00% Contractual 12/31/11 76,912
(1)Expense limitation per annum of the respective class' average daily net assets. Through March 23, 2001, Fasciano Company, Inc., agreed to reimburse Fasciano's Predecessor to the extent that total operating expenses, excluding brokers' commissions and other charges relative to the purchase and sale of portfolio securities, interest charges, taxes, litigation and other extraordinary expenses, exceeded 2.00% of average net assets. No amounts were reimbursed to Fasciano's Predecessor under this arrangement. The Investor Class of Century, International, Millennium, Regency, and Technology and the Trust Class, Advisor Class, and Institutional Class of each fund have agreed to repay Management for their excess Operating Expenses previously reimbursed by Management, so long as their annual Operating Expenses during that period do not exceed their Expense Limitations, and the repayments are made within three years after the year in which Management issued the reimbursement. During the six months ended February 28, 2002, there was no reimbursement to Management. Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New York Stock Exchange and sub-adviser to each Fund, are wholly owned subsidiaries of Neuberger Berman Inc., a publicly held company. Neuberger is retained by Management to furnish it with investment recommendations and research information without added cost to each Fund. Several individuals who are officers and/or trustees of the Trust are also employees of Neuberger and/or Management. 80 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Each class of shares also has a distribution agreement with Management. Management receives no commissions for sales or redemptions of shares of beneficial interest of each share class, but receives fees from certain classes under the Plan, as described above. Each Fund has an expense offset arrangement in connection with its custodian contract. The impact of this arrangement, reflected in the Statements of Operations under the caption Custodian fees, was a reduction of $0, $14, $432, $5,054, $544, $62, $322, $103, $201, $28, $499, and $122 for Century, Fasciano, Focus, Genesis, Guardian, International, Manhattan, Millennium, Partners, Regency, Socially Responsive, and Technology, respectively. Note C--Securities Transactions: During the six months ended February 28, 2002, there were purchase and sale transactions (excluding short-term securities, financial futures contracts, foreign currency contracts, and option contracts) as follows:
Purchases Sales Century $ 10,389,000 $ 13,399,000 Fasciano 15,640,000 18,172,000 Focus 230,428,000 294,727,000 Genesis 646,200,000 189,293,000 Guardian 1,019,886,000 997,458,000 International 22,636,000 27,144,000 Manhattan 228,104,000 276,976,000 Millennium 77,743,000 83,922,000 Partners 662,361,000 796,051,000 Regency 28,486,000 31,110,000 Socially Responsive 32,754,000 34,754,000 Technology 14,656,000 15,733,000
During the six months ended February 28, 2002, there were brokerage commissions on securities paid to Neuberger and other brokers as follows:
Other Neuberger Brokers Total Century $ 16,000 $ 9,000 $ 25,000 Fasciano 18,000 27,000 45,000 Focus 295,000 390,000 685,000 Genesis 413,000 618,000 1,031,000 Guardian 1,570,000 1,816,000 3,386,000 International -- 118,000 118,000 Manhattan 238,000 194,000 432,000 Millennium 29,000 43,000 72,000 Partners 1,274,000 1,087,000 2,361,000 Regency 64,000 20,000 84,000 Socially Responsive 78,000 17,000 95,000 Technology 10,000 3,000 13,000
81 Notes to Financial Statements Equity Funds cont'd Note D--Line of Credit: At February 28, 2002, each Fund (except International) was a holder of a single committed, unsecured $200,000,000 line of credit with State Street, to be used only for temporary or emergency purposes. Interest is charged on borrowings under this agreement at the overnight Federal Funds Rate plus 0.50% per annum. A facility fee of 0.10% per annum of the available line of credit is charged, of which each Fund has agreed to pay its pro rata share, based on the ratio of its individual net assets to the net assets of all participants at the time the fee is due and payable. The fee is paid quarterly in arrears. No compensating balance is required. Other investment companies managed by Management also participate in this line of credit on the same terms. Because several investment companies participate, there is no assurance that an individual Fund will have access to the entire $200,000,000 at any particular time. There were no loans outstanding pursuant to this line of credit at February 28, 2002. During the six months ended February 28, 2002, none of the Funds utilized this line of credit. At February 28, 2002, International was one of two holders of a single $20,000,000 uncommitted, secured line of credit with State Street to be used only for temporary or emergency purposes or for leverage. Interest is charged at LIBOR, or the overnight Federal Funds Rate, plus a spread to be determined at the time of borrowing. Another investment company managed by Management also participates in this line of credit on the same terms. Because another investment company participates, there is no assurance that an individual Fund will have access to the entire $20,000,000 at any particular time. International had no loans outstanding pursuant to this line of credit at February 28, 2002, nor had it utilized this line of credit at any time prior to that date. 82 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Note E--Investments In Non-Controlled Affiliates*:
Focus Gross Balance of Balance of Purchases Gross Shares Held Value Shares Held and Sales and February 28, February 28, Name of Issuer August 31, 2001 Additions Reductions 2002 2002 Furniture Brands International 3,945,000 -- 330,000 3,615,000 $137,912,000 Nationwide Financial Services 1,597,500 -- 25,000 1,572,500 63,655,000 Pacific Sunwear of California** 1,785,000 20,000 465,000 1,340,000 32,857,000 Tech Data 3,272,500 20,000 497,500 2,795,000 128,011,000
Genesis Gross Balance of Balance of Purchases Gross Shares Held Value Shares Held And Sales And February 28, February 28, Name of Issuer August 31, 2001 Additions Reductions 2002 2002 AAR Corp.** 1,528,350 -- 1,528,350 -- $ -- Actel Corp. 1,288,600 75,000 -- 1,363,600 24,449,000 Alberto-Culver Class A 1,261,900 185,000 -- 1,446,900 66,080,000 Alliant Techsystems** 546,050 273,025 251,300 567,775 53,320,000 Annuity and Life Re 996,400 453,200 -- 1,449,600 24,034,000 AptarGroup Inc. 2,671,800 512,200 -- 3,184,000 110,166,000 Church & Dwight 2,135,000 210,000 -- 2,345,000 72,461,000 Davox Corp. 814,700 11,700 -- 826,400 7,140,000 Fair, Isaac & Co.** 862,350 195,300 29,400 1,028,250 63,083,000 The First Years 475,500 -- -- 475,500 5,635,000 Haemonetics Corp. 1,105,800 480,300 -- 1,586,100 47,710,000 Kaydon Corp. 1,483,600 40,000 -- 1,523,600 38,059,000 Mentor Corp. 1,753,000 214,000 -- 1,967,000 64,911,000 META Group** 138,500 -- 138,500 -- -- Mutual Risk Management** 1,271,686 -- 1,271,686 -- -- OceanFirst Financial 557,100 -- -- 557,100 15,086,000 R.H. Donnelley 678,700 922,000 -- 1,600,700 46,084,000 Simpson Manufacturing 700,100 60,800 -- 760,900 41,089,000 Scottish Annuity and Life Holdings** 891,500 -- -- 891,500 14,175,000 Wallace Computer Services 2,679,200 150,000 -- 2,829,200 52,849,000 Zebra Technologies 1,182,300 105,500 -- 1,287,800 66,309,000
* Affiliated issuers, as defined in the 1940 Act, include issuers in which the Fund held 5% or more of the outstanding voting securities. ** At February 28, 2002, the issuers of these securities were no longer affiliated with the Fund. Note F--Cessation of Operations: On October 2, 2001, the Board of Trustees of Neuberger Berman Equity Funds approved the cessation of the operations of the Trust Classes of Neuberger Berman Century Fund and Neuberger Berman Technology Fund. The Trust Classes of Neuberger Berman Century Fund and Neuberger Berman Technology Fund ceased operations on December 14, 2001 and January 15, 2002, respectively. Shareholders received the net asset value per share for all shares they owned at that date. This may have been a taxable event for those shareholders not participating in a qualified retirement vehicle. 83 Notes to Financial Statements Equity Funds cont'd On September 7, 2000 and December 6, 2000, the Board of Trustees of Neuberger Berman Equity Assets approved the cessation of the operations of Neuberger Berman Socially Responsive Assets and Neuberger Berman Millennium Assets, respectively. Neuberger Berman Socially Responsive Assets and Neuberger Berman Millennium Assets ceased operations on December 1, 2000 and December 14, 2000, respectively. Shareholders received the net asset value per share for all shares they owned at that date. This may have been a taxable event for those shareholders not participating in a qualified retirement vehicle. Note G--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. 84 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Century Fund The following table includes selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Period from Six Months Ended Year Ended December 6, 1999/\ February 28, August 31, to August 31, -------------------- ------------- --------------------- 2002 2001 2000 (Unaudited) Net Asset Value, Beginning of $ 6.50 $ 13.44 $ 10.00 Period ------ ------- ------- Income From Investment Operations Net Investment Income (Loss) (.03) (.08) (.05) Net Gains or Losses on Securities (.21) (6.86) 3.49 (both realized and unrealized) ------ ------- ------- Total From Investment Operations (.24) (6.94) 3.44 ------ ------- ------- Net Asset Value, End of Period $ 6.26 $ 6.50 $ 13.44 ------ ------- ------- Total Return/+//+/ -3.85%** -51.60% +34.40%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 15.4 $ 17.5 $ 43.6 Ratio of Gross Expenses to Average Net Assets/#/ 1.51%* 1.50% 1.50%* Ratio of Net Expenses to Average Net Assets/++/ 1.51%* 1.50% 1.50%* Ratio of Net Investment Income (Loss) to Average Net Assets (.89%)* (.86%) (.81%)* Portfolio Turnover Rate 62% 107% 65%
See Notes to Financial Highlights 85 Financial Highlights Fasciano Fund The following table includes selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class Six Months Ended Two Months Ended February 28, August 31, Year Ended June 30, -------------------- -------------------- ------------------------------------------------ 2002 2001 2001(Pounds) 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning $33.93 $34.39 $32.55 $31.78 $34.91 $ 27.53 $ 24.33 of Period ------ ------ ------ ------ ------ ------- ------- Income From Investment Operations Net Investment Income (Loss) (.08) (.06) (.11) .34 .40 .16 (.03) Net Gains or Losses on Securities (both realized 1.66 (.40) 2.24 .82 (2.25) 8.71 3.82 and unrealized) ------ ------ ------ ------ ------ ------- ------- Total From Investment 1.58 (.46) 2.13 1.16 (1.85) 8.87 3.79 Operations ------ ------ ------ ------ ------ ------- ------- Less Distributions From Net Investment Income -- -- (.29) (.39) (.03) -- -- From Net Capital Gains (1.08) -- -- -- (1.25) (1.49) (.59) ------ ------ ------ ------ ------ ------- ------- Total Distributions (1.08) -- (.29) (.39) (1.28) (1.49) (.59) ------ ------ ------ ------ ------ ------- ------- Net Asset Value, End of $34.43 $33.93 $34.39 $32.55 $31.78 $ 34.91 $ 27.53 Period ------ ------ ------ ------ ------ ------- ------- Total Return/+//+/ +4.88%** -1.34%** +6.64% +3.70% -5.20% +33.20% +15.80% Ratios/Supplemental Data Net Assets, End of Period (in millions) $213.4 $203.3 $210.6 $266.9 $418.2 $ 95.0 $ 42.1 Ratio of Gross Expenses to Average Net Assets/#/ 1.46%* 1.58%* 1.3% --% --% --% --% Ratio of Net Expenses to Average Net Assets 1.46%* 1.58%* 1.3% 1.2% 1.2% 1.3% 1.4% Ratio of Net Investment Income (Loss) to Average Net Assets (.53%)* (1.03%)* (.4%) .8% 1.8% .2% (.4%) Portfolio Turnover Rate 8% 4% 3% 29% 20% 50% 41%
See Notes to Financial Highlights 86 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Focus Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- ---------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $ 36.11 $ 50.61 $ 36.25 $ 27.79 $ 38.89 $ 28.46 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss) -- (.04) (.01) .02 .10 .08 Net Gains or Losses on Securities (both realized and unrealized) (1.89) (10.23) 19.69 10.50 (6.21) 12.00 -------- -------- -------- -------- -------- -------- Total From Investment Operations (1.89) (10.27) 19.68 10.52 (6.11) 12.08 -------- -------- -------- -------- -------- -------- Less Distributions From Net Investment Income -- -- (.01) (.09) (.06) (.22) From Net Capital Gains (2.42) (4.23) (5.31) (1.97) (4.93) (1.43) -------- -------- -------- -------- -------- -------- Total Distributions (2.42) (4.23) (5.32) (2.06) (4.99) (1.65) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 31.80 $ 36.11 $ 50.61 $ 36.25 $ 27.79 $ 38.89 -------- -------- -------- -------- -------- -------- Total Return/++/ -5.60%** -20.40% +59.29% +38.09% -17.37% +43.92% Ratios/Supplemental Data Net Assets, End of Period (in millions) $1,473.3 $1,618.6 $1,996.4 $1,326.6 $1,119.9 $1,411.9 Ratio of Gross Expenses to Average Net Assets/#/ .85%* .83% .85% .85% .84% .86% Ratio of Net Expenses to Average Net Assets .85%* .83% .84% .85% .84% .86% Ratio of Net Investment Income (Loss) to Average Net Assets .01%* (.09%) (.02%) .03% .27% .21% Portfolio Turnover Rate 12% 38% 55% 57% 64% 63%
Trust Class/-/+// Six Months Ended February 28, Year Ended August 31, -------------------- -------------------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $26.66 $ 35.33 $ 23.62 $ 17.14 $ 21.27 $ 14.83 ------ ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.02) (.08) (.05) (.02) .03 .01 Net Gains or Losses on Securities (both realized and unrealized) (1.41) (7.17) 13.40 6.53 (3.66) 6.49 ------ ------- ------- ------- ------- ------- Total From Investment Operations (1.43) (7.25) 13.35 6.51 (3.63) 6.50 ------ ------- ------- ------- ------- ------- Less Distributions From Net Investment Income -- -- -- (.03) (.01) (.06) From Net Capital Gains (1.78) (1.42) (1.64) -- (.49) -- ------ ------- ------- ------- ------- ------- Total Distributions (1.78) (1.42) (1.64) (.03) (.50) (.06) ------ ------- ------- ------- ------- ------- Net Asset Value, End of Period $23.45 $ 26.66 $ 35.33 $ 23.62 $ 17.14 $ 21.27 ------ ------- ------- ------- ------- ------- Total Return/+//+/ -5.73%** -20.58% +59.02% +38.07% -17.45% +43.93% Ratios/Supplemental Data Net Assets, End of Period (in millions) $361.0 $ 398.2 $ 372.4 $ 216.0 $ 193.2 $ 160.9 Ratio of Gross Expenses to Average Net Assets/#/ 1.04%* 1.03% 1.05% .95% .94% .96% Ratio of Net Expenses to Average Net Assets 1.04%* 1.03% 1.05%/++/ .95%/++/ .94%/++/ .96%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.17%)* (.28%) (.22%) (.07%) .17% .11% Portfolio Turnover Rate 12% 38% 55% 57% 64% 63%
See Notes to Financial Highlights 87 Financial Highlights Focus Fund cont'd
Advisor Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- ------------------------------------------------- 2002 2001 2000 1999 1998 (Unaudited) Net Asset Value, Beginning of Period $18.64 $ 23.57 $ 16.18 $ 11.31 $ 14.34 ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.03) (.15) (.06) (.08) (.03) Net Gains or Losses on Securities (both realized and unrealized) (.97) (4.78) 8.99 4.96 (2.42) ------ ------- ------- ------- ------- Total From Investment Operations (1.00) (4.93) 8.93 4.88 (2.45) ------ ------- ------- ------- ------- Less Distributions From Net Capital Gains (1.24) -- (1.54) (.01) (.58) ------ ------- ------- ------- ------- Net Asset Value, End of Period $16.40 $ 18.64 $ 23.57 $ 16.18 $ 11.31 ------ ------- ------- ------- ------- Total Return/+//+/ -5.74%** -20.92% +58.68% +43.15% -17.73% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 20.3 $ 20.7 $ 15.2 $ 1.9 $ 0.5 Ratio of Gross Expenses to Average Net Assets/#/ 1.26%* 1.47% 1.50% 1.50% 1.50% Ratio of Net Expenses to Average Net Assets 1.26%* 1.47% 1.50%/++/ 1.50%/++/ 1.50%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.38%)* (.71%) (.66%) (.58%) (.36%) Portfolio Turnover Rate 12% 38% 55% 57% 64%
Advisor Class/+/ Period from September 4, 1996/\ to August 31, ------------------- 1997 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) 4.39 ------- Total From Investment Operations 4.34 ------- Less Distributions From Net Capital Gains -- ------- Net Asset Value, End of Period $ 14.34 ------- Total Return/+//+/ +43.40%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 0.1 Ratio of Gross Expenses to Average Net Assets/#/ 1.50 %* Ratio of Net Expenses to Average Net Assets 1.50%*/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.43%)* Portfolio Turnover Rate 63%
See Notes to Financial Highlights 88 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Genesis Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- -------------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $ 19.78 $ 18.00 $ 14.39 $ 12.47 $ 15.55 $ 10.91 -------- ------- ------- ------- -------- ------- Income From Investment Operations Net Investment Income (Loss) (.03) (.01) -- .11 .11 (.01) Net Gains or Losses on Securities (both realized 1.65 2.83 3.69 2.27 (3.00) 4.80 and unrealized) -------- ------- ------- ------- -------- ------- Total From Investment Operations 1.62 2.82 3.69 2.38 (2.89) 4.79 -------- ------- ------- ------- -------- ------- Less Distributions From Net Investment Income -- -- (.08) (.12) -- -- From Net Capital Gains (.58) (1.04) -- (.34) (.19) (.15) -------- ------- ------- ------- -------- ------- Total Distributions (.58) (1.04) (.08) (.46) (.19) (.15) -------- ------- ------- ------- -------- ------- Net Asset Value, End of Period $ 20.82 $ 19.78 $ 18.00 $ 14.39 $ 12.47 $ 15.55 -------- ------- ------- ------- -------- ------- Total Return/++/ +8.37%** +16.52% +25.79% +19.20% -18.82% +44.32% Ratios/Supplemental Data Net Assets, End of Period (in millions) $1,106.0 $ 978.3 $ 749.0 $ 851.3 $1,079.1 $ 718.1 Ratio of Gross Expenses to Average Net Assets/#/ 1.08%* 1.11% 1.21% 1.17% 1.11% 1.17% Ratio of Net Expenses to Average Net Assets 1.08%* 1.11% 1.21% 1.17% 1.10%/++/ 1.16%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.26%)* (.07%) (.02%) .61% .72% (.08%) Portfolio Turnover Rate 6% 19% 38% 33% 18% 18%
Trust Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- -------------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $ 28.33 $ 25.34 $ 20.26 $ 17.28 $ 21.45 $ 14.99 -------- -------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.04) (.03) -- .13 .12 (.01) Net Gains or Losses on Securities (both realized 2.35 4.06 5.19 3.17 (4.14) 6.61 and unrealized) -------- -------- ------- ------- ------- ------- Total From Investment Operations 2.31 4.03 5.19 3.30 (4.02) 6.60 -------- -------- ------- ------- ------- ------- Less Distributions From Net Investment Income -- -- (.11) (.12) -- -- From Net Capital Gains (.84) (1.04) -- (.20) (.15) (.14) -------- -------- ------- ------- ------- ------- Total Distributions (.84) (1.04) (.11) (.32) (.15) (.14) -------- -------- ------- ------- ------- ------- Net Asset Value, End of Period $ 29.80 $ 28.33 $ 25.34 $ 20.26 $ 17.28 $ 21.45 -------- -------- ------- ------- ------- ------- Total Return/++/ +8.34%** +16.50% +25.76% +19.15% -18.88% +44.31% Ratios/Supplemental Data Net Assets, End of Period (in millions) $1,999.8 $1,520.1 $ 770.9 $ 591.1 $ 704.5 $ 382.7 Ratio of Gross Expenses to Average Net Assets/#/ 1.13%* 1.15% 1.21% 1.23% 1.17% 1.26% Ratio of Net Expenses to Average Net Assets 1.13%* 1.15% 1.21% 1.23% 1.17%/++/ 1.25%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.30%)* (.11%) (.02%) .54% .68% (.16%) Portfolio Turnover Rate 6 % 19% 38% 33% 18% 18 %
See Notes to Financial Highlights 89 Financial Highlights Genesis Fund cont'd
Six Months Ended Advisor Class/+/ February 28, Year Ended August 31, -------------------- ------------------------------------------------- 2002 2001 2000 1999 1998 (Unaudited) Net Asset Value, Beginning of Period $16.72 $ 15.84 $ 12.64 $ 10.67 $ 13.21 ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.05) (.07) (.04) .01 .02 Net Gains or Losses on Securities 1.39 2.42 3.25 1.99 (2.52) (both realized and unrealized) ------ ------- ------- ------- ------- Total From Investment Operations 1.34 2.35 3.21 2.00 (2.50) ------ ------- ------- ------- ------- Less Distributions From Net Investment Income -- -- (.01) (.03) -- From Net Capital Gains (.49) (1.47) -- -- (.04) ------ ------- ------- ------- ------- Total Distributions (.49) (1.47) (.01) (.03) (.04) ------ ------- ------- ------- ------- Net Asset Value, End of Period $17.57 $ 16.72 $ 15.84 $ 12.64 $ 10.67 ------ ------- ------- ------- ------- Total Return/+//+/ +8.19%** +16.18% +25.42% +18.75% -18.99% Ratios/Supplemental Data Net Assets, End of Period (in millions) $252.8 $ 169.7 $ 99.0 $ 81.8 $ 24.5 Ratio of Gross Expenses to Average Net Assets/#/ 1.39%* 1.46% 1.50% 1.50% 1.50% Ratio of Net Expenses to Average Net Assets 1.38%* 1.46% 1.50%/++/ 1.50%/++/ 1.50%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.56%)* (.42%) (.31%) .16% .60% Portfolio Turnover Rate 6% 19% 38% 33% 18%
Period from April 2, 1997/\ Advisor Class/+/ to August 31, --------------------- 1997 Net Asset Value, Beginning of Period $ 10.00 ------- Income From Investment Operations Net Investment Income (Loss) (.01) Net Gains or Losses on Securities 3.22 (both realized and unrealized) ------- Total From Investment Operations 3.21 ------- Less Distributions From Net Investment Income -- From Net Capital Gains -- ------- Total Distributions -- ------- Net Asset Value, End of Period $ 13.21 ------- Total Return/+//+/ +32.10%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 0.7 Ratio of Gross Expenses to Average Net Assets/#/ 1.50%* Ratio of Net Expenses to Average Net Assets 1.50%*/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.36%)* Portfolio Turnover Rate 18%
Period from Six Months Ended July 1, 1999/\ Institutional Class/+/ February 28, Year Ended August 31, to August 31, -------------------- ---------------------- ----------------- 2002 2001 2000 1999 (Unaudited) Net Asset Value, Beginning of Period $26.88 $ 25.41 $ 20.28 $21.01 ------ ------- ------- ------ Income From Investment Operations Net Investment Income (Loss) -- .05 .08 .02 Net Gains or Losses on Securities 2.23 3.87 5.20 (.75) (both realized and unrealized) ------ ------- ------- ------ Total From Investment Operations 2.23 3.92 5.28 (.73) ------ ------- ------- ------ Less Distributions From Net Investment Income -- (.06) (.04) -- From Net Capital Gains (.79) (2.39) (.11) -- ------ ------- ------- ------ Total Distributions (.79) (2.45) (.15) -- ------ ------- ------- ------ Net Asset Value, End of Period $28.32 $ 26.88 $ 25.41 $20.28 ------ ------- ------- ------ Total Return/+//+/ +8.48%** +16.87% +26.22% -3.47%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $434.9 $ 357.7 $ 232.1 $224.2 Ratio of Gross Expenses to Average Net Assets/#/ .85%* .85% .85% .85%* Ratio of Net Expenses to Average Net Assets/++/ .85%* .85% .85% .85%* Ratio of Net Investment Income (Loss) to Average Net Assets (.03%)* .19% .34% .48%* Portfolio Turnover Rate 6% 19% 38% 33%
See Notes to Financial Highlights 90 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Guardian Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- -------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $ 14.30 $ 20.22 $ 22.72 $ 21.32 $ 31.41 $ 23.78 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss) .06 .13 .14 .18 .18 .15 Net Gains or Losses on Securities (both realized (.23) (2.82) 2.99 5.29 (6.09) 8.96 and unrealized) -------- -------- -------- -------- -------- -------- Total From Investment Operations (.17) (2.69) 3.13 5.47 (5.91) 9.11 -------- -------- -------- -------- -------- -------- Less Distributions From Net Investment Income (.07) (.13) (.15) (.16) (.18) (.24) From Net Capital Gains -- (3.10) (5.48) (3.91) (4.00) (1.24) -------- -------- -------- -------- -------- -------- Total Distributions (.07) (3.23) (5.63) (4.07) (4.18) (1.48) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 14.06 $ 14.30 $ 20.22 $ 22.72 $ 21.32 $ 31.41 -------- -------- -------- -------- -------- -------- Total Return/+//+/ -1.16%** -13.36% +16.84% +26.12% -20.80% +39.69% Ratios/Supplemental Data Net Assets, End of Period (in millions) $1,866.6 $1,999.5 $2,713.2 $3,441.0 $4,210.8 $6,475.1 Ratio of Gross Expenses to Average Net Assets/#/ .87%* .84% .84% .82% .79% .80% Ratio of Net Expenses to Average Net Assets .87%* .84% .84% .82% .79% .80% Ratio of Net Investment Income (Loss) to Average Net Assets .86%* .83% .64% .70% .59% .55% Portfolio Turnover Rate 44% 88% 83% 73% 60% 50%
Trust Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- ------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $11.27 $ 15.44 $ 16.36 $ 14.24 $ 19.47 $ 14.24 ------ ------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss) .04 .09 .09 .12 .09 .08 Net Gains or Losses on Securities (both realized (.18) (2.16) 2.23 3.57 (3.93) 5.48 and unrealized) ------ ------- -------- -------- -------- -------- Total From Investment Operations (.14) (2.07) 2.32 3.69 (3.84) 5.56 ------ ------- -------- -------- -------- -------- Less Distributions From Net Investment Income (.05) (.09) (.10) (.10) (.10) (.10) From Net Capital Gains -- (2.01) (3.14) (1.47) (1.29) (.23) ------ ------- -------- -------- -------- -------- Total Distributions (.05) (2.10) (3.24) (1.57) (1.39) (.33) ------ ------- -------- -------- -------- -------- Net Asset Value, End of Period $11.08 $ 11.27 $ 15.44 $ 16.36 $ 14.24 $ 19.47 ------ ------- -------- -------- -------- -------- Total Return/+//+/ -1.22%** -13.47% +16.72% +26.07% -20.88% +39.56% Ratios/Supplemental Data Net Assets, End of Period (in millions) $446.6 $ 555.4 $1,093.6 $1,251.2 $1,529.5 $2,269.8 Ratio of Gross Expenses to Average Net Assets/#/ 1.01%* .98% .91% .88% .87% .88% Ratio of Net Expenses to Average Net Assets 1.01%* .98% .91% .88% .87% .88% Ratio of Net Investment Income (Loss) to Average Net Assets .72%* .69% .58% .65% .50% .47% Portfolio Turnover Rate 44% 88% 83% 73% 60% 50%
See Notes to Financial Highlights 91 Financial Highlights Guardian Fund cont'd
Advisor Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- -------------------------------------------- 2002 2001 2000 1999 1998 (Unaudited) Net Asset Value, Beginning of Period $12.75 $ 15.60 $ 13.54 $ 10.81 $ 13.88 ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) .03 .05 -- -- (.02) Net Gains or Losses on Securities (.20) (2.19) 2.16 2.73 (2.92) (both realized and unrealized) ------ ------- ------- ------- ------- Total From Investment Operations (.17) (2.14) 2.16 2.73 (2.94) ------ ------- ------- ------- ------- Less Distributions From Net Investment Income (.04) (.03) (.01) -- -- From Net Capital Gains -- (.68) (.09) -- (.13) ------ ------- ------- ------- ------- Total Distributions (.04) (.71) (.10) -- (.13) ------ ------- ------- ------- ------- Net Asset Value, End of Period $12.54 $ 12.75 $ 15.60 $ 13.54 $ 10.81 ------ ------- ------- ------- ------- Total Return/+//+/ -1.32%** -13.74% +16.04% +25.25% -21.34% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 21.1 $ 24.1 $ 27.5 $ 24.8 $ 17.5 Ratio of Gross Expenses to Average Net Assets/#/ 1.23%* 1.32% 1.48% 1.50% 1.50% Ratio of Net Expenses to Average Net Assets 1.23%* 1.32% 1.47% 1.50%/++/ 1.50%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets .49%* .35% --% .03% (.16%) Portfolio Turnover Rate 44% 88% 83% 73% 60%
Advisor Class/+/ Period from September 4, 1996/\ to August 31, ------------------------- 1997 Net Asset Value, Beginning of Period $ 10.00 ------- Income From Investment Operations Net Investment Income (Loss) .01 Net Gains or Losses on Securities 3.88 (both realized and unrealized) ------- Total From Investment Operations 3.89 ------- Less Distributions From Net Investment Income (.01) From Net Capital Gains -- ------- Total Distributions (.01) ------- Net Asset Value, End of Period $ 13.88 ------- Total Return/+//+/ +38.92%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 9.3 Ratio of Gross Expenses to Average Net Assets/#/ 1.50%* Ratio of Net Expenses to Average Net Assets 1.50%*/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.12%)* Portfolio Turnover Rate 50%
See Notes to Financial Highlights 92 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights International Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Six Months Ended February 28, Year Ended August 31, ----------------------- ------------------------------------------------------------ 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of $11.81 $ 20.82 $ 16.76 $ 13.85 $14.83 $ 11.91 Period ------ ------- ------- ------- ------ ------- Income From Investment Operations Net Investment Income (Loss) (.02) .05 (.07) (.08) (.03) -- Net Gains or Losses on Securities (both realized (.77) (4.74) 4.35 3.00 (.81) 2.94 and unrealized) ------ ------- ------- ------- ------ ------- Total From Investment (.79) (4.69) 4.28 2.92 (.84) 2.94 Operations ------ ------- ------- ------- ------ ------- Less Distributions From Net Investment Income (.02) -- (.01) -- -- (.02) From Net Capital Gains (.04) (4.32) (.21) (.01) (.14) -- ------ ------- ------- ------- ------ ------- Total Distributions (.06) (4.32) (.22) (.01) (.14) (.02) ------ ------- ------- ------- ------ ------- Net Asset Value, End of Period $10.96 $ 11.81 $ 20.82 $ 16.76 $13.85 $ 14.83 ------ ------- ------- ------- ------ ------- Total Return/+//+/ -6.70%** -25.71% +25.43% +21.09% -5.69% +24.71% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 83.5 $ 98.2 $ 193.7 $ 112.5 $125.5 $ 115.4 Ratio of Gross Expenses to Average Net Assets/#/ 1.70%* 1.56 % 1.43 % 1.61 % 1.71 % 1.70 % Ratio of Net Expenses to Average Net Assets 1.70%*/++/ 1.56 % 1.43 % 1.61 %/(S)/ 1.70%/(S)/ 1.70 %/(S)/ Ratio of Net Investment Income (Loss) to Average Net Assets (.44%)* .33 % (.33%) (.43%) (.24%) (.02%) Portfolio Turnover Rate 27% 61% 80% 94% 46% 37 %
Trust Class/+/ Period from Six Months Ended June 29, 1998/\ February 28, Year Ended August 31, to August 31, -------------------- ----------------------------- ------------------ 2002 2001 2000 1999 1998 (Unaudited) Net Asset Value, Beginning of Period $12.56 $ 21.24 $ 16.92 $ 13.87 $ 17.13 ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.04) -- (.08) (.07) (.02) Net Gains or Losses on Securities (both realized and unrealized) (.84) (4.82) 4.61 3.12 (3.24) ------ ------- ------- ------- ------- Total From Investment Operations (.88) (4.82) 4.53 3.05 (3.26) ------ ------- ------- ------- ------- Less Distributions From Net Investment Income -- -- (.01) -- -- From Net Capital Gains (.04) (3.86) (.20) -- -- ------ ------- ------- ------- ------- Total Distributions (.04) (3.86) (.21) -- -- ------ ------- ------- ------- ------- Net Asset Value, End of Period $11.64 $ 12.56 $ 21.24 $ 16.92 $ 13.87 ------ ------- ------- ------- ------- Total Return/+//+/ -7.01%** -25.43% +26.72% +21.99% -19.03%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 1.2 $ 1.8 $ 4.0 $ 2.4 $ 1.8 Ratio of Gross Expenses to Average Net Assets/#/ 1.98%* 1.86 % 1.53 % 1.70 % 1.70%* Ratio of Net Expenses to Average Net Assets/++/ 1.98%* 1.86 % 1.53 % 1.70 % 1.70%* Ratio of Net Investment Income (Loss) to Average Net Assets (.71%)* -- % (.43%) (.49%) (.54%)* Portfolio Turnover Rate 27 % 61 % 80 % 94 % 46 %
See Notes to Financial Highlights 93 Financial Highlights Manhattan Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Six Months Ended Investor Class/+/ February 28, Year Ended August 31, -------------------- --------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $ 6.63 $ 21.01 $ 12.07 $ 9.42 $ 14.51 $ 11.94 ------ ------- -------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.02) (.05) (.08) (.06) (.05) (.03) Net Gains or Losses on Securities (both realized (.58) (8.97) 10.22 3.54 (1.20) 4.26 and unrealized) ------ ------- -------- ------- ------- ------- Total From Investment Operations (.60) (9.02) 10.14 3.48 (1.25) 4.23 ------ ------- -------- ------- ------- ------- Less Distributions From Net Capital Gains (.05) (5.36) (1.20) (.83) (3.84) (1.66) ------ ------- -------- ------- ------- ------- Net Asset Value, End of Period $ 5.98 $ 6.63 $ 21.01 $ 12.07 $ 9.42 $ 14.51 ------ ------- -------- ------- ------- ------- Total Return/+//+/ -9.12%** -51.10% +87.89% +37.40% -11.02% +38.75% Ratios/Supplemental Data Net Assets, End of Period (in millions) $409.1 $ 517.8 $1,178.6 $ 566.0 $ 476.6 $ 570.4 Ratio of Gross Expenses to Average Net Assets/#/ 1.04%* .95 % .92 % 1.00 % .95 % .99 % Ratio of Net Expenses to Average Net Assets 1.04%* .95 % .92 % 1.00 % .94 % .98 % Ratio of Net Investment Income (Loss) to Average Net Assets (.67%)* (.52%) (.52%) (.50%) (.42%) (.20%) Portfolio Turnover Rate 48% 102% 105% 115% 90% 89%
Six Months Ended Trust Class/+/ February 28, Year Ended August 31, -------------------- ------------------------------------------------- 2002 2001 2000 1999 1998 (Unaudited) Net Asset Value, Beginning of Period $10.23 $ 26.01 $ 15.02 $ 11.61 $ 15.77 ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.04) (.11) (.11) (.11) (.07) Net Gains or Losses on Securities (both realized and unrealized) (.88) (12.03) 12.64 4.29 (1.40) ------ ------- ------- ------- ------- Total From Investment Operations (.92) (12.14) 12.53 4.18 (1.47) ------ ------- ------- ------- ------- Less Distributions From Net Capital Gains (.07) (3.64) (1.54) (.77) (2.69) ------ ------- ------- ------- ------- Net Asset Value, End of Period $ 9.24 $ 10.23 $ 26.01 $ 15.02 $ 11.61 ------ ------- ------- ------- ------- Total Return/+//+/ -9.05%** -51.16% +87.95% +36.24% -11.23% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 25.5 $ 32.0 $ 138.6 $ 45.3 $ 46.1 Ratio of Gross Expenses to Average Net Assets/#/ 1.13%* 1.07 % 1.02 % 1.11 % 1.04 % Ratio of Net Expenses to Average Net Assets 1.13%* 1.07 % 1.02 %/++/ 1.11 %/++/ 1.04%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.75%)* (.66%) (.62%) (.61%) (.52%) Portfolio Turnover Rate 48% 102% 105% 115% 90%
Trust Class/+/ 1997 Net Asset Value, Beginning of Period $ 12.18 ------- Income From Investment Operations Net Investment Income (Loss) (.04) Net Gains or Losses on Securities (both realized and unrealized) 4.55 ------- Total From Investment Operations 4.51 ------- Less Distributions From Net Capital Gains (.92) ------- Net Asset Value, End of Period $ 15.77 ------- Total Return/+//+/ +38.84% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 51.1 Ratio of Gross Expenses to Average Net Assets/#/ 1.09 % Ratio of Net Expenses to Average Net Assets 1.09 %/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.30%) Portfolio Turnover Rate 89%
See Notes to Financial Highlights 94 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Manhattan Fund cont'd
Period from Six Months Ended September 4, 1996/\ Advisor Class/+/ February 28, Year Ended August 31, to August 31, -------------------- ---------------------------------------- ------------------- 2002 (Unaudited) 2001 2000 1999 1998 1997 Net Asset Value, Beginning of Period $10.77 $ 27.05 $ 14.54 $ 10.76 $ 13.75 $ 10.00 ------ ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.06) (.16) (.21) (.04) (.11) (.08) Net Gains or Losses on Securities (.93) (12.62) 12.72 3.92 (1.22) 3.94 (both realized and unrealized) ------ ------- ------- ------- ------- ------- Total From Investment Operations (.99) (12.78) 12.51 3.88 (1.33) 3.86 ------ ------- ------- ------- ------- ------- Less Distributions From Net Capital Gains (.08) (3.50) -- (.10) (1.66) (.11) ------ ------- ------- ------- ------- ------- Net Asset Value, End of Period $ 9.70 $ 10.77 $ 27.05 $ 14.54 $ 10.76 $ 13.75 ------ ------- ------- ------- ------- ------- Total Return/+//+/ -9.26%** -51.43% +86.04% +36.09% -11.29% +38.86%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 1.9 $ 1.8 $ 5.4 $ 1.7 $ 0.2 $ 0.1 Ratio of Gross Expenses to Average Net Assets/#/ 1.50%* 1.50 % 1.50 % 1.50 % 1.50 % 1.50 %* Ratio of Net Expenses to Average Net Assets/++/ 1.50%* 1.50 % 1.50 % 1.50 % 1.50 % 1.50 %* Ratio of Net Investment Income (Loss) to Average Net Assets (1.13%)* (1.05%) (1.09%) (1.00%) (.98 %) (.70%)* Portfolio Turnover Rate 48 % 102 % 105 % 115 % 90 % 89 %
See Notes to Financial Highlights 95 Financial Highlights Millennium Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Period from Six Months Ended October 20, 1998/\ February 28, Year Ended August 31, to August 31, -------------------- ------------------------ ------------------------ 2002 2001 2000 1999 (Unaudited) Net Asset Value, Beginning of Period $14.35 $ 36.02 $ 19.49 $ 10.00 ------ ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.08) (.21) (.24) (.10) Net Gains or Losses on Securities (both realized (.88) (16.36) 18.61 9.59 and unrealized) ------ ------- ------- ------- Total From Investment Operations (.96) (16.57) 18.37 9.49 ------ ------- ------- ------- Less Distributions From Net Capital Gains -- (5.09) (1.84) -- Tax Return of Capital -- (.01) -- -- ------ ------- ------- ------- Total Distributions -- (5.10) (1.84) -- ------ ------- ------- ------- Net Asset Value, End of Period $13.39 $ 14.35 $ 36.02 $ 19.49 ------ ------- ------- ------- Total Return/+//+/ -6.56%** -48.32% +96.88% +94.90%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 99.0 $ 118.0 $ 315.5 $ 66.4 Ratio of Gross Expenses to Average Net Assets/#/ 1.64%* 1.47 % 1.38 % 1.76 %* Ratio of Net Expenses to Average Net Assets 1.64%* 1.47 % 1.38 %/(S)/ 1.75%*/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (1.10%)* (1.08%) (.94%) (1.23%)* Portfolio Turnover Rate 68% 158% 176% 208%
Period from Six Months Ended November 4, 1998/\ Trust Class/+/ February 28, Year Ended August 31, to August 31, -------------------- ---------------------- --------------------- 2002 2001 2000 1999 (Unaudited) Net Asset Value, Beginning of Period $15.82 $ 34.10 $ 18.20 $ 10.00 ------ ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.09) (.28) (.27) (.10) Net Gains or Losses on Securities (both realized and (.97) (15.89) 17.45 8.30 unrealized) ------ ------- ------- ------- Total From Investment Operations (1.06) (16.17) 17.18 8.20 ------ ------- ------- ------- Less Distributions From Net Capital Gains -- (2.11) (1.28) -- ------ ------- ------- ------- Net Asset Value, End of Period $14.76 $ 15.82 $ 34.10 $ 18.20 ------ ------- ------- ------- Total Return/+//+/ -6.64%** -48.45% +96.66% +82.00%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 6.7 $ 7.9 $ 19.5 $ 2.2 Ratio of Gross Expenses to Average Net Assets/#/ 1.75%* 1.75 % 1.75 % 1.76 %* Ratio of Net Expenses to Average Net Assets/++/ 1.75%* 1.75 % 1.75 % 1.75 %* Ratio of Net Investment Income (Loss) to Average Net Assets (1.21%)* (1.35%) (1.31%) (1.24%)* Portfolio Turnover Rate 68% 158% 176% 208%
See Notes to Financial Highlights 96 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Partners Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Six Months Ended Investor Class/+/ February 28, Year Ended August 31, -------------------- -------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $ 20.54 $ 25.03 $ 26.42 $ 22.97 $ 31.60 $ 23.88 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss) .03 .08 .19 .27 .23 .19 Net Gains or Losses on Securities .08 (2.47) 1.81 5.59 (2.83) 10.36 (both realized and unrealized) -------- -------- -------- -------- -------- -------- Total From Investment Operations .11 (2.39) 2.00 5.86 (2.60) 10.55 -------- -------- -------- -------- -------- -------- Less Distributions From Net Investment Income (.08) (.17) (.29) -- (.19) (.22) From Net Capital Gains (.38) (1.93) (3.10) (2.41) (5.84) (2.61) -------- -------- -------- -------- -------- -------- Total Distributions (.46) (2.10) (3.39) (2.41) (6.03) (2.83) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 20.19 $ 20.54 $ 25.03 $ 26.42 $ 22.97 $ 31.60 -------- -------- -------- -------- -------- -------- Total Return/+//+/ +0.55%** -9.68 % +8.51 % +26.08% -10.03% +47.11% Ratios/Supplemental Data Net Assets, End of Period (in millions) $1,573.3 $1,689.4 $2,191.8 $2,854.4 $2,812.7 $3,103.7 Ratio of Gross Expenses to Average Net Assets/#/ .86 %* .84 % .84 % .82 % .80 % .81 % Ratio of Net Expenses to Average Net Assets .86 %* .84 % .84 % .82 % .80 % .81 % Ratio of Net Investment Income (Loss) to Average Net Assets .34 %* .35 % .60 % .94 % .78 % .72 % Portfolio Turnover Rate 32% 73% 95% 132% 109% 77%
Six Months Ended Trust Class/+/ February 28, Year Ended August 31, -------------------- --------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $15.81 $18.74 $18.71 $ 15.24 $ 18.80 $ 13.39 ------ ------ ------ ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) .01 .03 .13 .16 .11 .07 Net Gains or Losses on Securities .06 (1.85) 1.34 3.77 (1.82) 6.06 (both realized and unrealized) ------ ------ ------ ------- ------- ------- Total From Investment Operations .07 (1.82) 1.47 3.93 (1.71) 6.13 ------ ------ ------ ------- ------- ------- Less Distributions From Net Investment Income (.03) (.11) (.19) -- (.08) (.08) From Net Capital Gains (.29) (1.00) (1.25) (.46) (1.77) (.64) ------ ------ ------ ------- ------- ------- Total Distributions (.32) (1.11) (1.44) (.46) (1.85) (.72) ------ ------ ------ ------- ------- ------- Net Asset Value, End of Period $15.56 $15.81 $18.74 $ 18.71 $ 15.24 $ 18.80 ------ ------ ------ ------- ------- ------- Total Return/+//+/ +0.46%** -9.81% +8.41% +25.91% -10.15% +47.11% Ratios/Supplemental Data Net Assets, End of Period (in millions) $432.6 $463.0 $622.6 $ 850.1 $ 729.7 $ 470.6 Ratio of Gross Expenses to Average Net Assets/#/ 1.03%* 1.00 % .92 % .91 % .90 % .91 % Ratio of Net Expenses to Average Net Assets 1.03%* 1.00 % .92 % .91 % .90 %/++/ .91 %/++/ Ratio of Net Investment Income (Loss) to Average Net Assets .17 %* .19 % .53 % .83 % .70 % .64 % Portfolio Turnover Rate 32 % 73 % 95 % 132 % 109 % 77 %
See Notes to Financial Highlights 97 Financial Highlights Partners Fund cont'd
Six Months Ended Advisor Class/+/ February 28, Year Ended August 31, -------------------- ----------------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $13.72 $ 16.03 $15.74 $ 12.59 $ 14.42 $ 9.91 ------ ------ ------ ------ ------ ----- Income From Investment Operations Net Investment Income (Loss) -- (.01) .02 .06 .01 .01 Net Gains or Losses on Securities (both realized .05 (1.60) 1.17 3.15 (1.51) 4.56 and unrealized) ------ ------- ------ ------- ------- ------- Total From Investment Operations .05 (1.61) 1.19 3.21 (1.50) 4.57 ------ ------- ------ ------- ------- ------- Less Distributions From Net Investment Income -- (.01) (.01) (.06) (.01) (.01) From Net Capital Gains (.25) (.69) (.89) -- (.32) (.05) ------ ------- ------ ------- ------- ------- Total Distributions (.25) (.70) (.90) (.06) (.33) (.06) ------ ------- ------ ------- ------- ------- Net Asset Value, End of Period $13.52 $ 13.72 $16.03 $ 15.74 $ 12.59 $ 14.42 ------ ------- ------ ------- ------- ------- Total Return/+//+/ +0.38%** -10.12% +7.99% +25.51% -10.69% +46.26% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 36.9 $ 43.1 $ 53.5 $ 62.4 $ 29.3 $ 5.8 Ratio of Gross Expenses to Average Net Assets/#/ 1.21%* 1.29% 1.32% 1.31% 1.50% 1.50% Ratio of Net Expenses to Average Net Assets 1.21%* 1.29% 1.32% 1.31% 1.50%/++/ 1.50%/++/ Ratio of Net Investment Income (Loss) to Average Net Assets (.02%)* (.10%) .11% .41% .12% .08% Portfolio Turnover Rate 32% 73% 95% 132% 109% 77%
See Notes to Financial Highlights 98 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Regency Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Period from Six Months Ended June 1, 1999/\ Investor Class/+/ February 28, Year Ended August 31, to August 31, -------------------- ---------------------- ----------------- 2002 2001 2000 1999 (Unaudited) Net Asset Value, Beginning of Period $12.92 $13.02 $ 9.82 $10.00 ------ ------ ------- ------ Income From Investment Operations Net Investment Income (Loss) .02 -- -- .01 Net Gains or Losses on Securities (both realized and unrealized) .19 .60 3.38 (.19) ------ ------ ------- ------ Total From Investment Operations .21 .60 3.38 (.18) ------ ------ ------- ------ Less Distributions From Net Investment Income (.01) -- (.02) -- From Net Capital Gains (1.44) (.70) (.16) -- ------ ------ ------- ------ Total Distributions (1.45) (.70) (.18) -- ------ ------ ------- ------ Net Asset Value, End of Period $11.68 $12.92 $ 13.02 $ 9.82 ------ ------ ------- ------ Total Return/+//+/ +2.20%** +4.81% +34.95% -1.80%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 17.9 $ 16.0 $ 10.9 $ 7.9 Ratio of Gross Expenses to Average Net Assets/#/ 1.50%* 1.50% 1.51% 1.51%* Ratio of Net Expenses to Average Net Assets/++/ 1.50%* 1.50% 1.50% 1.50%* Ratio of Net Investment Income (Loss) to Average Net Assets .30%* (.02%) --% .66%* Portfolio Turnover Rate 80% 256% 200% 42%
Period from Six Months Ended June 10, 1999/\ Trust Class/+/ February 28, Year Ended August 31, to August 31, -------------------- ---------------------- ------------------ 2002 2001 2000 1999 (Unaudited) Net Asset Value, Beginning of Period $11.30 $13.15 $ 9.76 $10.00 ------ ------ ------- ------ Income From Investment Operations Net Investment Income (Loss) .01 (.01) -- .01 Net Gains or Losses on Securities (both realized and unrealized) .17 .55 3.40 (.25) ------ ------ ------- ------ Total From Investment Operations .18 .54 3.40 (.24) ------ ------ ------- ------ Less Distributions From Net Investment Income (.01) -- (.01) -- From Net Capital Gains (1.27) (2.39) -- -- ------ ------ ------- ------ Total Distributions (1.28) (2.39) (.01) -- ------ ------ ------- ------ Net Asset Value, End of Period $10.20 $11.30 $ 13.15 $ 9.76 ------ ------ ------- ------ Total Return/+//+/ +2.16%** +4.77% +34.86% -2.40%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 22.0 $ 25.4 $ 25.1 $ 0.4 Ratio of Gross Expenses to Average Net Assets/#/ 1.50%* 1.50% 1.51% 1.51%* Ratio of Net Expenses to Average Net Assets/++/ 1.50%* 1.50% 1.50% 1.50%* Ratio of Net Investment Income (Loss) to Average Net Assets .29%* (.06%) (.01%) .57%* Portfolio Turnover Rate 80% 256% 200% 42%
See Notes to Financial Highlights 99 Financial Highlights Socially Responsive Fund The following tables include selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Six Months Ended February 28, Year Ended August 31, -------------------- ----------------------------------------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $18.96 $21.01 $21.33 $ 16.32 $17.79 $ 13.88 ------ ------ ------ ------- ------ ------- Income From Investment Operations Net Investment Income (Loss) .01 .02 -- .02 .07 .03 Net Gains or Losses on Securities (both realized and unrealized) .09 (2.07) .57 5.94 (1.11) 4.33 ------ ------ ------ ------- ------ ------- Total From Investment Operations .10 (2.05) .57 5.96 (1.04) 4.36 ------ ------ ------ ------- ------ ------- Less Distributions From Net Investment Income (.06) -- (.02) (.07) (.03) (.03) From Net Capital Gains (1.72) -- (.87) (.88) (.40) (.42) ------ ------ ------ ------- ------ ------- Total Distributions (1.78) -- (.89) (.95) (.43) (.45) ------ ------ ------ ------- ------ ------- Net Asset Value, End of Period $17.28 $18.96 $21.01 $ 21.33 $16.32 $ 17.79 ------ ------ ------ ------- ------ ------- Total Return/+//+/ +0.36%** -9.76% +2.96% +37.09% -6.02% +31.96% Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 82.2 $ 87.8 $107.6 $ 118.9 $ 82.5 $ 59.7 Ratio of Gross Expenses to Average Net Assets/#/ 1.21%* 1.13% 1.12% 1.10% 1.10% 1.49% Ratio of Net Expenses to Average Net Assets 1.20%* 1.13% 1.12% 1.10% 1.10% 1.48%/(S)/ Ratio of Net Investment Income (Loss) to Average Net Assets .16%* .08% .01% .12% .43% .23% Portfolio Turnover Rate 30% 83% 76% 53% 47% 51%
Trust Class/+/ Period from Six Months Ended March 3, 1997/\ February 28, Year Ended August 31, to August 31, -------------------- ------------------------------------ --------------- 2002 2001 2000 1999 1998 1997 (Unaudited) Net Asset Value, Beginning of Period $13.07 $ 14.53 $14.41 $ 10.64 $11.43 $ 10.00 ------ ------- ------ ------- ------ ------- Income From Investment Operations Net Investment Income (Loss) -- (.03) (.02) -- .03 -- Net Gains or Losses on Securities (both realized and unrealized) .05 (1.43) .40 3.90 (.71) 1.43 ------ ------- ------ ------- ------ ------- Total From Investment Operations .05 (1.46) .38 3.90 (.68) 1.43 ------ ------- ------ ------- ------ ------- Less Distributions From Net Investment Income -- -- -- (.03) (.01) -- From Net Capital Gains (1.18) -- (.25) (.10) (.10) -- Tax Return of Capital -- -- (.01) -- -- -- ------ ------- ------ ------- ------ ------- Total Distributions (1.18) -- (.26) (.13) (.11) -- ------ ------- ------ ------- ------ ------- Net Asset Value, End of Period $11.94 $ 13.07 $14.53 $ 14.41 $10.64 $ 11.43 ------ ------- ------ ------- ------ ------- Total Return/+//+/ +0.22%** -10.05% +2.76% +36.76% -6.05% +14.30%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 30.1 $ 28.3 $ 29.0 $ 25.3 $ 13.4 $ 7.7 Ratio of Gross Expenses to Average Net Assets/#/ 1.39%* 1.46% 1.32% 1.20% 1.20% 1.58%* Ratio of Net Expenses to Average Net Assets/++/ 1.39%* 1.46% 1.32% 1.20% 1.20% 1.58%* Ratio of Net Investment Income (Loss) to Average Net Assets (.04%)* (.25%) (.19%) .01% .33% .06%* Portfolio Turnover Rate 30% 83% 76% 53% 47% 51%
See Notes to Financial Highlights 100 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Financial Highlights Technology Fund The following table includes selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements./@/
Investor Class/+/ Period from Six Months Ended Year Ended May 1, 2000/\ February 28, August 31, to August 31, -------------------- ------------- ----------------- 2002 2001 2000 (Unaudited) Net Asset Value, Beginning of Period $ 3.61 $ 12.16 $ 10.00 ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) (.03) (.09) (.01) Net Gains or Losses on Securities (both realized and unrealized) (.53) (8.44) 2.17 ------- ------- ------- Total From Investment Operations (.56) (8.53) 2.16 ------- ------- ------- Less Distributions From Net Capital Gains -- (.02) -- ------- ------- ------- Net Asset Value, End of Period $ 3.05 $ 3.61 $ 12.16 ------- ------- ------- Total Return/+//+/ -15.51%** -70.24% +21.60%** Ratios/Supplemental Data Net Assets, End of Period (in millions) $ 7.2 $ 9.0 $ 22.0 Ratio of Gross Expenses to Average Net Assets/#/ 2.02%* 2.00 % 2.00%* Ratio of Net Expenses to Average Net Assets/++/ 2.01%* 2.00 % 2.00%* Ratio of Net Investment Income (Loss) to Average Net Assets (1.84%)* (1.45%) (.12%)** Portfolio Turnover Rate 172 % 234 % 55 %
See Notes to Financial Highlights 101 Notes to Financial Highlights Equity Funds /+/ The per share amounts and ratios which are shown reflect income and expenses, including each Fund's proportionate share of its corresponding Portfolio's income and expenses through December 15, 2000 under the prior master/feeder fund structure. /+//+/ Total return based on per share net asset value reflects the effects of changes in net asset value on the performance of each Fund during each fiscal period and assumes dividends and other distributions, if any, were reinvested. Results represent past performance and do not guarantee future results. Investment returns and principal may fluctuate and shares when redeemed may be worth more or less than original cost. Total return would have been lower if Management had not reimbursed certain expenses. In addition, for Genesis, total return would have been lower if the investment manager had not waived a portion of the management fee. # The Fund is required to calculate an expense ratio without taking into consideration any expense reductions related to expense offset arrangements. /++/ After reimbursement of expenses by Management and/or the waiver of a portion of the management fee by the investment manager. Had Management not undertaken such action the annualized ratios of net expenses to average daily net assets would have been:
Six Months Ended February 28, Year Ended August 31, 2002 2001 2000 1999 1998 1997 Century Fund Investor Class 2.39% 1.80% 1.76%/(1)/ -- -- -- Focus Fund Trust Class -- -- 1.06% .98% .97% 1.06% Focus Fund Advisor Class -- -- 2.89% 7.08% 28.01% 76.74%/(2)/ Genesis Fund Investor Class -- -- -- -- 1.12% 1.26% Genesis Fund Trust Class -- -- -- -- 1.19% 1.35% Genesis Fund Advisor Class -- -- 1.59% 1.63% 2.40% 25.91%/(3)/ Genesis Fund Institutional Class .88% .91% .97% 1.15%/(4)/ -- -- Guardian Fund Advisor Class -- -- -- 1.56% 1.63% 5.65%/(2)/ International Fund Investor Class 1.74% -- -- -- -- -- International Fund Trust Class 3.00% 5.16% 4.21% 5.98% 6.02%/(5)/ -- Manhattan Fund Trust Class -- -- 1.08% 1.18% 1.15% 1.23% Manhattan Fund Advisor Class 2.25% 2.60% 3.57% 19.99% 42.53% 77.83%/(2)/ Millennium Fund Investor Class -- -- -- 2.13%/(6)/ -- -- Millennium Fund Trust Class 1.94% 2.11% 2.12% 13.39%/(7)/ -- -- Partners Fund Trust Class -- -- -- -- .91% .94% Partners Fund Advisor Class -- -- -- -- 1.56% 8.74% Regency Fund Investor Class 1.63% 1.61% 2.22% 8.38%/(8)/ -- -- Regency Fund Trust Class 1.81% 1.76% 1.75% 129.45%/(9)/ -- -- Socially Responsive Fund Trust Class -- 1.59% 1.76% 1.72% 2.05% 3.33%/(10)/ Technology Fund Investor Class 3.80% 2.60% 3.92%/(11)/ -- -- --
(1)Period from December 6, 1999 to August 31, 2000 (2)Period from September 4, 1996 to August 31, 1997 (3)Period from April 2, 1997 to August 31, 1997 (4)Period from July 1, 1999 to August 31, 1999 (5)Period from June 29, 1998 to August 31, 1998 102 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Notes to Financial Highlights Equity Funds cont'd (6)Period from October 20, 1998 to August 31, 1999 (7)Period from November 4, 1998 to August 31, 1999 (8)Period from June 1, 1999 to August 31, 1999 (9)Period from June 10, 1999 to August 31, 1999 (10)Period from March 3, 1997 to August 31, 1997 (11)Period from May 1, 2000 to August 31, 2000 /(S)/After reimbursement of expenses previously paid by Management. Had Management not been reimbursed, the annualized ratios of net expenses to average daily net assets would have been:
Year Ended August 31, 2000 1999 1998 1997 International Fund Investor Class -- 1.59% 1.61% 1.69% Millennium Fund Investor Class 1.33% -- -- -- Socially Responsive Fund Investor Class -- -- -- 1.20%
/\ The date investment operations commenced. @ The per share amounts which are shown for the periods ended August 31, 2001 and thereafter, have been computed based on the average number of shares outstanding during each fiscal period. * Annualized. ** Not annualized. (Pounds)Effective after the close of business on March 23, 2001, Neuberger Berman Management Inc., succeeded Fasciano Company, Inc., as the Fund's investment manager. 103 Directory Investment Manager, Administrator and Distributor Neuberger Berman Management Inc. 605 Third Avenue 2nd Floor New York, NY 10158-0180 800.877.9700 or 212.476.8800 Institutional Services 800.366.6264 Sub-Adviser Neuberger Berman, LLC 605 Third Avenue New York, NY 10158-3698 Custodian and Shareholder Servicing Agent State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 For Investor Class Shareholders Address correspondence to: Neuberger Berman Funds Boston Service Center P.O. Box 8403 Boston, MA 02266-8403 800.877.9700 or 212.476.8800 For Trust Class, Advisor Class, and Institutional Class Shareholders Address correspondence to: Neuberger Berman Management Inc. 605 Third Avenue 2nd Floor New York, NY 10158-0180 Attn: Institutional Services 800.366.6264 Legal Counsel Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW 2nd Floor Washington, DC 20036-1800 104 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Trustees and Officers The following tables set forth information concerning the trustees and officers of the Trust. All persons named as trustees and officers also serve in similar capacities for other funds administered or managed by NB Management and Neuberger Berman. Information about the Board of Trustees
Number of Portfolios in Position and Fund Complex Length of Time Overseen by Other Directorships Held Outside Name, Age, and Address /(1)/ Served /(2)/ Principal Occupation(s) /(3)/ Trustee Fund Complex by Trustee -------------------------------------------------------------------------------------------------------------------------- John Cannon (72) Trustee since Retired. Formerly, Chairman 28 Independent Trustee or 2000 and Chief Investment Officer of Director of three series of CDC Capital Management Oppenheimer Funds: (registered investment adviser) Limited Term New York (1993-Jan. 1999). Municipal Fund, Rochester Fund Municipals, and Oppenheimer Convertible Securities Fund, 1992 to present. -------------------------------------------------------------------------------------------------------------------------- Faith Colish (66) Trustee since Attorney at Law and President, 28 1982 Faith Colish, A Professional Corporation; 1980 to present. -------------------------------------------------------------------------------------------------------------------------- Walter G. Ehlers (68) Trustee since Consultant. Retired President 28 2000 and Trustee of Teachers Insurance & Annuity (TIAA) and College Retirement Equities Fund (CREF).
105 Trustees and Officers cont'd
Number of Portfolios in Position and Fund Complex Length of Time Overseen by Other Directorships Held Outside Name, Age, and Address/ (1)/ Served /(2)/ Principal Occupation(s) /(3)/ Trustee Fund Complex by Trustee -------------------------------------------------------------------------------------------------------------------------- C. Anne Harvey (64) Trustee since Consultant, C. A. Harvey 28 2000 Associates, June 2001 to present; Member, Individual Investors Advisory Committee to the New York Stock Exchange Board of Directors, 1998 to present; Secretary, Board of Associates to The National Rehabilitation Hospital's Board of Directors; Director of American Association of Retired Persons (AARP), 1978 to December 2000; Member, American Savings Education Council's Policy Board (ASEC), 1998- 2000; Member, Executive Committee, Crime Prevention Coalition of America, 1997- 2000. -------------------------------------------------------------------------------------------------------------------------- Barry Hirsch (68) Trustee since Senior Vice President and 28 2000 General Counsel of Loews Corporation (diversified financial corporation). -------------------------------------------------------------------------------------------------------------------------- Robert A. Kavesh (74) Trustee since Professor of Finance and 28 Director, Delaware Labs, 2000 Economics at Stern School of 1978 to present (cosmetics). Business, New York University. -------------------------------------------------------------------------------------------------------------------------- Howard A. Mileaf (65) Trustee since Retired. Formerly, Vice 28 Director, State Theatre of 1984 President and Special Counsel New Jersey (not-for-profit to WHX Corporation (holding theater), 2000 to present; company); 1993 - 2001. Formerly, Director of Kevlin Corporation (manufacturer of microwave and other products). -------------------------------------------------------------------------------------------------------------------------- John P. Rosenthal (69) Trustee since Senior Vice President of 28 Director, 92nd Street Y 1985 Burnham Securities Inc. (a (non-profit), 1967 to present; registered broker-dealer) since Formerly, Director, Cancer 1991. Treatment Holdings, Inc.
106 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
Number of Portfolios in Position and Fund Complex Length of Time Overseen by Other Directorships Held Outside Name, Age, and Address /(1)/ Served /(2)/ Principal Occupation(s) /(3)/ Trustee Fund Complex by Trustee --------------------------------------------------------------------------------------------------------------------------- William E. Rulon (69) Trustee since Retired. Senior Vice President 28 Director, Pro-Kids Golf and 2000 of Foodmaker, Inc. (operator Learning Academy, 1998 to and Franchiser of Restaurants) present (teach golf and until January 1997; Secretary of computer usage to "at risk" Foodmaker, Inc. until July 1996. children); Director of Prandium, Inc. since March 2001 (restaurants). --------------------------------------------------------------------------------------------------------------------------- Cornelius T. Ryan (70) Trustee since General Partner of Oxford 28 Formerly, Director of Capital 1982 Partners and Oxford Bioscience Cash Management Trust Partners (venture capital (money market fund) and partnerships) and President of Prime Cash Fund. Oxford Venture Corporation. --------------------------------------------------------------------------------------------------------------------------- Tom Decker Seip (52) Trustee since General Partner of Seip 28 Director, H&R Block, Inc. 2000 Investments LP (a private (financial services company), investment partnership); May 2001 to present; President and CEO of Westaff, Director, General Magic Inc., May 2001 to January 2002 (voice recognition software), (temporary staffing); Senior November 2001 to present; Executive at the Charles Schwab Director, Forward Corporation from 1983 to 1999; Management, Inc. (asset including Chief Executive management), 2001-present; Officer of Charles Schwab Member of the Board of Investment Management, Inc. Directors of E-Finance and Trustee of Schwab Family Corporation (credit of Funds and Schwab decisioning services), 1999 to Investments from 1997 to 1998; present; Director, Save- Executive Vice President-Retail Daily.com (micro investing Brokerage for Charles Schwab services), 1999 to present; Investment Management from Formerly, Director of 1994 to 1997. Offroad Capital Inc. (pre- public internet commerce company).
107 Trustees and Officers cont'd
Number of Portfolios in Position and Fund Complex Length of Time Overseen by Other Directorships Held Outside Name, Age, and Address /(1)/ Served /(2)/ Principal Occupation(s) /(3)/ Trustee Fund Complex by Trustee ----------------------------------------------------------------------------------------------------------------------------- Gustave H. Shubert /(4)/ (73) Trustee since Senior Fellow/Corporate 28 1989 Advisor and Advisory Trustee of Rand (a non-profit public interest research institution) since 1989; Honorary Member of the Board of Overseers of the Institute for Civil Justice, the Policy Advisory Committee of the Clinical Scholars Program at the University of California, the American Association for the Advancement of Science, the Council on Foreign Relations, and the Institute for Strategic Studies (London); advisor to the Program Evaluation and Methodology Division of the U.S. General Accounting Office; formerly Senior Vice President and Trustee of Rand. ----------------------------------------------------------------------------------------------------------------------------- Candace L. Straight (54) Trustee since Private investor and consultant 28 2000 specializing in the insurance industry; Advisory Director of Securities Capital LLC (a global private equity investment firm dedicated to making investments in the insurance sector). ----------------------------------------------------------------------------------------------------------------------------- Peter P. Trapp (57) Trustee since Regional Manager for Atlanta 28 2000 Region, Ford Motor Credit Company since August, 1997; prior thereto, President, Ford Life Insurance Company, April 1995 until August 1997. ----------------------------------------------------------------------------------------------------------------------------- Michael M. Kassen* (48) President and Executive Vice President and 28 Executive Vice President, Trustee since Chief Investment Officer of Chief Investment Officer and 1999 Neuberger Berman since 1999; Director of Neuberger Executive Vice President and Berman Inc. (holding Chief Financial Officer of NB company) since 1999; Management from November Chairman since May 2000 1999 to March 2000; Vice and Director of NB President of NB Management Management since January from 1990 until 1999; Partner or 1996. Principal of Neuberger Berman from 1993.
108 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED)
Number of Portfolios in Position and Fund Complex Length of Time Overseen by Other Directorships Held Outside Name, Age, and Address /(1)/ Served /(2)/ Principal Occupation(s) /(3)/ Trustee Fund Complex by Trustee ---------------------------------------------------------------------------------------------------------------------------- Edward I. O'Brien* (73) Trustee since Member, Investment Policy 28 Director of Legg Mason, Inc. 1993 Committee, Edward Jones, (financial services holding 1993-2001; President of the company), 1993 to present; Securities Industry Association Director, Boston Financial ("SIA") (securities industry's Group (real estate and tax representative in government shelters) 1993-1999. relations and regulatory matters at the federal and state levels) from 1974-1992; Adviser to SIA from November 1992- November 1993. ---------------------------------------------------------------------------------------------------------------------------- Peter E. Sundman* (42) Chairman of Executive Vice President of 28 Executive Vice President and the Board, Neuberger Berman since 1999; Director of Neuberger Chief Executive Principal of Neuberger Berman Berman Inc. (holding Officer and from 1997 until 1999; Senior company) since 1999; Trustee since Vice President of NB President and Director of NB 1999 Management from 1996 until Management since 1999. 1999; Director of Institutional Services of NB Management from 1988 until 1996.
(1) The business address of each listed person is 605 Third Avenue, New York, New York 10158. (2) Pursuant to the Trust's Trust Instrument, each Trustee shall hold office for life or until his or her successor is elected or the Trust terminates; except that (a) any Trustee may resign by delivering a written resignation; (b) any Trustee may be removed with or without cause at any time by a written instrument signed by at least two-thirds of the other Trustees; (c) any Trustee who requests to be retired, or who has become unable to serve, may be retired by a written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any shareholder meeting by a vote of at least two-thirds of the outstanding shares. Mssrs. Cannon, Ehlers, Hirsch, Kavesh, Rulon and Trapp and Ms. Harvey and Ms. Straight served as Trustees of other Neuberger Berman Funds before the boards were unified in 2000. (3) Except as otherwise indicated, each individual has held the positions shown for at least the last five years. (4) Retired March 7, 2002. * Indicates a trustee who is an "interested person" within the meaning of the 1940 Act. Mr. Sundman and Mr. Kassen are interested persons of the Trust by virtue of the fact that they are officers and/or directors of NB Management and Executive Vice Presidents of Neuberger Berman. Mr. O'Brien is an interested person of the Trust by virtue of the fact that he is a director of Legg Mason, Inc., a wholly owned subsidiary of which, from time to time, serves as a broker or dealer to the Portfolios and other funds for which NB Management serves as investment manager. 109 Information about the Officers of the Trust
Position and Name, Age, and Address /(1)/ Length of Time Served /(2)/ Principal Occupation(s)/ (3)/ ---------------------------------------------------------------------------------------------------------------- Claudia A. Brandon (45) Secretary since 1986 Vice President of Neuberger Berman since 2002 and Employee since 1999; Vice President-Mutual Fund Board Relations of NB Management since 2000; Vice President of NB Management from 1986 to 1999; Secretary of two other mutual funds for which NB Management acts as investment manager and administrator. Robert Conti (45) Vice President since 2000 Vice President of Neuberger Berman since 1999; Senior Vice President of NB Management since 2000; Controller of NB Management until 1996; Treasurer of NB Management from 1996 until 1999; Vice President of two other mutual funds for which NB Management acts as investment manager and administrator since 2000. Stacy Cooper-Shugrue (38) Assistant Secretary since 1991 Vice President-Mutual Fund Board Relations of NB Management since February 25, 2002; Employee of Neuberger Berman since 1999; Assistant Vice President of NB Management from 1993 to 1999; Assistant Secretary of two other mutual funds for which NB Management acts as investment manager and administrator. Barbara DiGiorgio (43) Assistant Treasurer since 1996 Vice President of Neuberger Berman since 1999; Assistant Vice President of NB Management from 1993 to 1999; Assistant Treasurer of two other mutual funds for which NB Management acts as investment manager and administrator. Brian J. Gaffney (48) Vice President since 2000 Managing Director of Neuberger Berman since 1999; Senior Vice President of NB Management since 2000; Vice President of NB Management from 1997 until 1999; Vice President of two other mutual funds for which NB Management acts as investment manager and administrator since 2000. Richard Russell (55) Treasurer and Principal Financial and Vice President of Neuberger Berman since Accounting Officer since 1993 1999; Vice President of NB Management from 1993 until 1999; Treasurer and Principal Financial and Accounting Officer of two other mutual funds for which NB Management acts as investment manager and administrator.
110 NEUBERGER BERMAN FEBRUARY 28, 2002 (UNAUDITED) Information about the Officers of the Trust cont'd
Position and Name, Age, and Address /(1)/ Length of Time Served /(2)/ Principal Occupation(s)/ (3)/ --------------------------------------------------------------------------------------------------------- Frederic B. Soule (55) Vice President since 2000 Vice President of Neuberger Berman since 1999; Vice President of NB Management from 1995 until 1999; Vice President of two other funds for which NB Management acts as investment manager and administrator since 2000. Celeste Wischerth (41) Assistant Treasurer since 1993 Vice President of Neuberger Berman since 1999; Assistant Vice President of NB Management from 1994 to 1999; Assistant Treasurer of two other mutual funds for which NB Management acts as investment manager and administrator.
-------- (1) The business address of each listed person is 605 Third Avenue, New York, New York 10158. (2) Pursuant to the by-laws of the Trust, each officer elected by the Trustees shall hold office until his or her successor shall have been elected and qualified or until his or her earlier death, inability to serve, or resignation. Officers serve at the pleasure of the Trustees and may be removed at any time with or without cause. (3) Except as otherwise indicated, each individual has held the positions shown for at least the last five years. 111 Statistics and projections in this report are derived from sources deemed to be reliable but cannot be regarded as a representation of future results of the Funds. This report is prepared for the general information of shareholders and is not an offer of shares of the Funds. Shares are sold only through the currently effective prospectus, which must precede or accompany this report. [LOGO] Neuberger Berman Neuberger Berman Management Inc. 605 Third Avenue 2nd Floor New York, NY 10158-0180 Shareholder Services 800.877.9700 Institutional Services 800.366.6264 www.nb.com [LOGO] recycle B0111 04/02