Neuberger Berman Genesis Fund Institutional Class (NBGIX) N-CSRSCertified semi-annual shareholder report (management investment company)

Neuberger Berman Emerging Markets Equity Fund Institutional Class generated a total return of 6.34% for the six-month period ended February 29, 2024 (the reporting period), outpacing its benchmark, the MSCI Emerging Markets (EM) Index (Net) (the Index), which reported a total return of 4.93% for the same period. (Performance for all share classes is provided in the table immediately following this letter.)

As this reporting period ended, however, optimism returned to the Chinese market, with economic activity picking up and government policy announcements continuing to be incrementally supportive. This led EM equities to outperform in February, with China the largest contributor to EM monthly returns. For the full reporting period, however, smaller markets such as Egypt, Poland and Colombia advanced most, and Czech Republic, Thailand and China posted the largest losses.

Six Index sectors advanced this reporting period, with Utilities, Energy and Information Technology (IT) in the lead with narrow themes driving the former two sectors. IT was driven largely by the semiconductor sub-sector, where makers of advanced chips used in artificial intelligence (AI) applications were the focus. China-linked sectors Communication Services, Real Estate, and Materials declined most.

Taiwan Semiconductor Manufacturing Co. and U.S.-based NVIDIA, whose majority of revenue is sourced from EM Asia, were our top contributors this reporting period. Both are chipmakers in the sweet spot of investor sentiment. The former holds a dominant position as the primary manufacturer of semiconductors that investors see benefiting from growth areas including AI, and the latter is the clear leader in that space.

Stock selection in Energy, Communication Services and Utilities (along with an underweight to the Utilities sector versus the Index) detracted from relative performance. By country, detractors included Saudi Arabia, and positions in non-Index Hong Kong and Canada.

Chinese heavyweights Alibaba and Tencent detracted the most as the Chinese internet space was sold by investors worried about local consumer sentiment, along with company-specific short-term headwinds.

Looking forward from a macro perspective, with the U.S. Presidential and many EM elections (including India and Mexico) scheduled for 2024, we believe headlines could continue to determine the near-term direction of EM returns. However, the team believes the tailwinds of lower inflation and interest rates, and should it continue, the bounce back in the IT semiconductor cycle, could drive the asset class higher in 2024.

After recent weakness, we welcomed China’s February rebound. However, China remains the Fund’s largest underweight versus the Index, in favor of India, where our overweight is spread across a diverse set of names and opportunities. We continue to underweight cyclical areas, such as Consumer Discretionary and Materials, in favor of Industrials and IT, two key overweights.

We believe our current positioning and hands-on approach will help the Fund capture growth in select segments while managing risk, as the team maintains its view that the global economy could present an uneven backdrop in the near term, rather than a worldwide cyclical uplift.

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

This Fund is an objective-based strategy, targeting a total return profile between stocks and bonds compounded over a full investment cycle with limited volatility relative to the Index. Overall, the Fund is diversified among dividend-paying stocks selected through extensive analysis of cash flow prospects, that we believe have the ability to sustain and grow dividends.

Sincerely,

Neuberger Berman Focus Fund Investor Class generated a 15.71% total return for the six-month period ended February 29, 2024 (the reporting period), outperforming the 11.66% total return of its benchmark, the MSCI All Country World Index (Net) (the Index), for the same period. (Performance for all share classes is provided in the table immediately following this letter.)

As measured by the Index, the global equity market generated strong results during the reporting period. Investor sentiment was boosted by better-than-expected U.S. economic growth, positive corporate earnings results, and benign inflation data. The U.S. Federal Reserve Board’s dovish shift toward interest rates also helped stock performance. These factors offset concerns about a global recession, China’s economic slowdown, higher rates, and geopolitical issues.

The Fund's performance during the reporting period versus the Index was primarily influenced by stock selection, with a minor boost coming from an overweight position in the Information Technology sector and an underweight stance in the Energy sector.

Looking at stock selection, positions in the Industrials (led by Ground Transportation), Financials (led by Insurance), and Materials (led by Construction Materials) sectors were the largest contributors to relative performance. In terms of individual stocks, the interactive media company Meta Platforms, Inc. and the semiconductor company NVIDIA Corp. were among the most additive to total returns. Conversely, holdings in the Utilities (driven by Electric Utilities), Consumer Staples (driven by Beverages), and Energy (driven by Oil, Gas & Consumable Fuels) sectors were the largest detractors from performance. Individual stocks that negatively impacted total returns included automobile company Mercedes-Benz Group AG, electrical utility company NextEra Energy, Inc., and semiconductor company ON Semiconductor Corp. During the reporting period, some of the names eliminated were HCA Healthcare Inc., Mercedes-Benz Group AG, ON Semiconductor Corp., and Bank of America Corp.

Looking ahead, we are encouraged by the resiliency of the U.S. economy in particular, despite several headwinds. We continue to seek to invest in companies around the world that we believe are effectively battling through uncertainty to gain market share and drive shareholder value at whatever speed the global economy is growing. 

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

Overcoming geopolitical and economic concerns, markets closed this reporting period in a positive mood, as slowing inflation drove expectations that interest rates would begin declining during 2024. Data releases broadly supported the view that central banks reached the peak of their tightening cycles. This optimism supported both equity and fixed income markets. 

Within the Index, the Information Technology (IT) sector performed best. The semiconductor industry group, driven by demand expectations for high-powered chips for artificial intelligence (AI) was a key factor, along with more general optimism around AI’s potential. The Industrials and Financials sectors also outperformed, while more defensive areas like Consumer Staples and Utilities (and Energy, on falling commodity prices) declined. By country, IT-heavy Netherlands, and Sweden and Israel outperformed, while Portugal, Hong Kong, and oil-driven Norway declined.

Although the Fund lagged the Index overall during the reporting period, sector allocation was advantageous, primarily given our overweights to IT and Industrials versus the Index. Stock selection within IT also added value. Holdings based in Japan and our overweight to the Netherlands were among the most significant positives from a country perspective.

Top individual contributors included ASML and Ebara. ASML, a Netherlands-based lithography equipment maker, recovered well after a selloff in the third quarter, which helped remove some of the uncertainty overhanging the stock. Both ASML and Ebara, a Japanese maker of industrial machinery, were beneficiaries of the AI-related optimism in the semiconductor industry.

Stock selection detracted overall, most notably within Financials and Consumer Discretionary. By country, holdings based in Switzerland and Germany detracted most.

Individual detractors included Julius Baer and Nestle. Julius Baer, a Swiss wealth manager, declined as a pick-up in bad loan provisions, plus underwhelming inflows and client activity, weighed on the stock. Nestle, the Swiss multinational food and beverages name, was weak following underwhelming results as higher prices began to negatively impact volumes.

Looking ahead, we believe that many companies that have been overshadowed by the few U.S. mega-cap technology companies driving the S&P 500, appear to be positioned to benefit from future trends such as increased capital expenditure, energy transition to a lower carbon future, and reshoring to localize supply chains.

Overall, in our view, the Fund is well diversified, and with ongoing economic uncertainty as a backdrop, focused on what we believe to be quality businesses with resilient earnings streams. 

Despite our disappointment with recent relative performance giving up much of the excess returns generated during the pandemic, we are optimistic about the medium- to longer-term prospects for the companies held in the Fund’s portfolio. 

As longer-term investors, we intend to remain patient through shorter-term swings in rates, sentiment, and style rotation, be they a headwind or tailwind. We believe the Fund is well-positioned for the longer-term risks and opportunities we foresee ahead.

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

Overcoming geopolitical and economic concerns, markets closed this reporting period in a positive mood, as slowing inflation drove expectations that interest rates would begin declining during 2024. Data releases broadly supported the view that central banks reached the peak of their tightening cycles. This optimism supported both equity and fixed income markets. 

Within the Index, the Information Technology (IT) sector performed best. The semiconductor industry group, driven by demand expectations for high-powered chips for artificial intelligence (AI) was a key factor, along with more general optimism around AI’s potential. The Industrials and Financials sectors also outperformed, while more defensive areas like Consumer Staples and Utilities (and Energy, on falling commodity prices) declined. By country, IT-heavy Netherlands, and Sweden and Israel outperformed, while Portugal, Hong Kong, and oil-driven Norway declined.

Although the Fund lagged the Index overall during the reporting period, sector allocation was advantageous, primarily given our overweights to IT and Industrials versus the Index. Stock selection within IT also added value. Holdings based in Japan and our overweight to the Netherlands were among the most significant positives from a country perspective.

Top individual contributors included ASML and Ebara. ASML, a Netherlands-based lithography equipment maker, recovered well after a selloff in the third quarter, which helped remove some of the uncertainty overhanging the stock. Both ASML and Ebara, a Japanese maker of industrial machinery, were beneficiaries of the AI-related optimism in the semiconductor industry.

Stock selection detracted overall, most notably within Financials and Consumer Discretionary. By country, holdings based in Switzerland and Germany detracted most.

Individual detractors included Julius Baer and Nestle. Julius Baer, a Swiss wealth manager, declined as a pick-up in bad loan provisions, plus underwhelming inflows and client activity, weighed on the stock. Nestle, the Swiss multinational food and beverages name, was weak following underwhelming results as higher prices began to negatively impact volumes.

Looking ahead, we believe that many companies that have been overshadowed by the few U.S. mega-cap technology companies driving the S&P 500, appear to be positioned to benefit from future trends such as increased capital expenditure, energy transition to a lower carbon future, and reshoring to localize supply chains.

Overall, in our view, the Fund is well diversified, and with ongoing economic uncertainty as a backdrop, focused on what we believe to be quality businesses with resilient earnings streams. 

Despite our disappointment with recent relative performance, giving up much of the excess returns generated during the pandemic, we are optimistic about the medium- to longer-term prospects for the companies held in the Fund’s portfolio. 

As longer-term investors, we intend to remain patient through shorter-term swings in rates, sentiment, and style rotation, be they a headwind or tailwind. We believe the Fund is well-positioned for the longer-term risks and opportunities we foresee ahead.

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

Global equity markets closed this reporting period up on optimism that slowing inflation would pave the way for interest rate cuts during 2024, reducing a significant headwind facing corporations and consumers. Data releases supported the consensus view that central banks had likely reached the peak of their tightening cycles. This generally bolstered sentiment in both equity and fixed income markets globally even as investors weighed geopolitical and macroeconomic concerns, from wars to continued weak manufacturing data in Europe. 

Within the Index, Financials, Information Technology (IT) and Industrials outperformed. Banks jumped on hopes for lower interest rates, and in the case of IT, the semiconductor industry group powered returns on excitement around potential demand growth for high-powered chips for artificial intelligence applications. By market, Sweden, Denmark and Italy closed up by double digits.

Weaker Index sectors included defensive Utilities and the office segment of Real Estate, both of which declined, and Materials. By country, Hong Kong (on sentiment related to China), New Zealand and Singapore declined.

Stock selection was the key to the Fund’s outperformance relative to the Index this reporting period, with sector allocation a secondary positive. Strong stock selection and an overweight to IT versus the Index was the primary contributor, with stock selection in Real Estate and Communication Services also advantageous. Holdings based in Japan, Switzerland and Australia added the most value by country.

Top contributors included Kokusai Electric, a Japanese semiconductor name, which saw orders recover more than expected; and Biotage, a Swedish manufacturer of life science/chemistry research equipment, which saw one division post triple-digit percentage growth in 2023.

Stock selection and an underweight to the top performing sector in the Index, Financials, and stock selection in Energy detracted from relative results. Stock selection in Italy and Denmark, and our non-Index allocation to Canada detracted most during the reporting period.

Nakanishi, a Japanese dental tools manufacturer, was the largest individual detractor, correcting on a demand slowdown following a strong replacement cycle when many offices upgraded equipment. We remain confident in the company’s prospects. Ero Copper, the Canadian miner, declined after posting mixed results. We sold it during the reporting period after a review. 

Despite the investor optimism that colored this reporting period, we anticipate we may see continued market volatility in 2024 given ongoing geopolitical risks and uncertainty about the strength of the global economy.

During 2023, we reassessed holdings within the Fund’s portfolio with a focus on companies with business model resiliency plus strong pricing power and cash flows, that operate in niches whose drivers are less linked to the global economy. During the reporting period, we began to further concentrate our highest conviction holdings in the areas we believe are most attractive for the medium to long term.

With global economic growth positive but the macro environment still uncertain, we are also favoring what we believe to be quality companies that seem to us to have sound balance sheets trading at attractive valuations. We believe this dual approach will help us capture upside for the longer term while softening any near-term volatility. 

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

In 2023, the factors and sectors that performed poorly throughout most of the year reversed dramatically during the last three months and our historic sector biases (overweight Information Technology (IT), underweight Financials) hurt the Fund’s relative performance versus the Index. In the first two months of 2024, we saw these trends reverse again and the Fund gained back some relative ground.

Sincerely,

Looking ahead, while the economy appears to be decelerating, it has been more resilient than many anticipated. Furthermore, despite calls for a deep cut to earnings, the profits of the S&P 500 companies for the full year of 2023 proved to be better than anticipated. Moreover, the focus has shifted to 2024, where full-year growth in profits is currently estimated to be approximately 10%. At the same time, progress has been made by the Fed in the fight against inflation, with core prices stabilizing and inflation moving closer to the Fed’s 2% target, all while economic growth remains strong. Meanwhile, the Fed has remained steadfast in its commitment to fighting inflation. While central bank officials have indicated rates are likely at a peak, uncertainty remains on how long they will remain at these elevated levels. Until we have more clarity on the path of the economy versus inflation and how that translates into actual rate cuts versus expectations, we anticipate continued market volatility. As always, we continue our efforts to best understand company and portfolio-specific factors, as we believe this environment is flush with a confluence of fiscal policy considerations, monetary policy stimulus, geopolitical uncertainty, commodity price volatility, inflation dynamics and sequencing question marks. We believe as market dynamics change, this can cause company market values to dislocate from their long-term inherent values, potentially creating a volatile environment with attractive opportunities.

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

Starting with their October 2023 meeting, the U.S. Federal Reserve Board (Fed) began signaling that their aggressive course of monetary tightening was likely at an end, a message that was further punctuated by Chairman Powell’s December comments around the potential for rate cuts in the coming year. That long-anticipated dovish pivot reinvigorated the market, fueling bullish sentiment and fostering positive momentum for small- and mid-cap equities, as the market and investors embraced the likelihood of an initial rate cut at some point in 2024. The resulting environment proved conducive to both our investment approach and style, as secular growth trends took center stage and stock selection reemerged as a primary driver of returns.

In looking at attribution for the reporting period, the Fund benefited from broad participation across a buoyant market as strong stock selection within our Information Technology, Industrials and Energy allocations easily offset stock-specific weakness within Financials and Consumer Discretionary. Drilling down to our holdings, positive contributors dwarfed detractors, as the market demonstrated a willingness to pay up for compelling secular growth and intriguing catalysts and reward strong top- and bottom-line execution. Super Micro Computer, which designs, manufactures, and markets a portfolio of server, storage and software products that allow customers to optimize solutions for their artificial intelligence, Cloud, Enterprise, 5G, IoT and Edge Computing workload applications and processing needs, was the leading contributor to returns as the company consistently delivered strong results and guidance that surpassed exceedingly high expectations. The leading detractor was Lattice Semiconductor, which designs, develops, and markets low power programmable integrated logic circuits and software to provide smart customizable connectivity solutions for consumer, communications, industrial, computing, and automotive applications. During the reporting period, the market reacted negatively to a material reduction in forward guidance, which management attributed to the negative impact of higher interest rates and macro weakness across their automotive and industrial segments in Asia and Europe. We believe the company has effectively reset expectations and we continue to maintain a position in Lattice.

Looking ahead, despite a robust prevailing "wall of worry", we are cautiously optimistic that the balance of 2024 can be a positive environment for mid cap growth equities and one reasonably conducive to our style of investing. That view is underpinned by our belief that the Fed is comfortable with where inflation is trending and that their "dovish" pivot is sustainable, corporate earnings will prove resilient and the breadth of market leadership will broaden. We will continue to leverage our highest conviction ideas, while seeking out new opportunities primed for the prevailing positive sentiment and reduced recessionary angst. Lastly, we also believe that quality will matter, and we will continue to maintain a bias towards investments that we believe have sustainable business models, balance sheet strength and managements capable of consistent execution across varied and potentially unsettled environments.

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.

Our take on the economy and inflation has been consistent. Inflation would come down, not to 2% but lower than what we saw in 2022 and early 2023, and widespread job losses were unlikely. The wild card was the U.S. Federal Reserve Board’s commitment to the stated 2% target. Too hawkish, a recession could ensue and too soft would undermine the long-term U.S. Treasury debt markets. Whether they’ve struck the right balance is still unclear.

Sincerely,

Information about principal risks of investing in the Fund is set forth in the prospectus and statement of additional information.