1. smartwomansecurities
October 3, 2006
Introduction to Investing Preston D. McSwain Senior Vice President Neuberger Berman Private Asset Management (617)
We would like to thank Neuberger Berman and Lehman Brothers for their generous offer to use of many of the firm’s slides and research in this presentation.
2006 Smart Woman Securities. All materials are for SWS members’ use only

2. Why Do You Invest? Winning is reaching your goals…
….. not beating the neighbors
Investing is a means to your ends…
….. Not a contest
Ask yourself a question, “Why do you invest?”
“What is it you truly want to win?”
Winning should be reaching your goals, having the financial capacity to achieve your life goals …
…not anyone else’s.
Remember, you want to build a financial house that won’t fall down in a strong wind. To do that, you need to start with a plan -- a blueprint. And one of the best plans around is asset allocation.

3. Your Investing Enemies:
Gut Instincts
Intuition
Friends & Family
As the old saying goes, “Fear and Greed” drive the stock market, but they shouldn’t drive your portfolio.
Emotions are the enemies of every investor.
So is listening to your stomach, or pulling answers out of the clouds.
Now, you’re probably looking at the last line on this slide -- “Friends and Family” -- and thinking, “what a terrible thing -- to call them enemies!”
But what if I told you that 30 percent of investors polled in a survey* said they rely on friends and family for investing advice? Would you think that was a wise decision? Would you rely on friends and family to diagnose a medical problem, or fix your car, or build your house?
* Source: Investment Company Institute

4. Three Main Asset Classes
Stocks growth
Bonds income
Diversification is a lot like having the basic food groups in your daily diet.
The three investment ‘food groups’ supply different basic benefits to your portfolio:
Equities give you the greatest potential for growth
Bonds provide current income, and can provide a stabilizing effect to the volatility of equities
And cash or cash equivalents satisfy any needs for liquidity
Cash liquidity
One way to minimize the risks of investing in stocks is to educate yourself about them!

5. Stocks (Primary Source for Growth)
Size Market Cap
Large-cap $5 billion+
Mid-cap $1-5 billion
Small-cap below $1 billion
Investment style
Value
Growth
Domestic and International
Let’s take a brief look at the three major asset classes.
Stocks -- also known as equities -- are the primary source for growth in a portfolio.
Within this asset class, however, there are a number of important sub-groups. Here, too, diversification can pay off. For example, when large-cap stocks are doing well the stocks of smaller capitalization companies may be sluggish.
The domestic market can be further divided into growth and value stocks, which tend to move in counter-cycles. Value stocks will frequently have lower price-to-earnings and price-to-book valuations relative to the market, while growth stocks generally receive higher premiums because of their current or projected growth momentum.
Past performance is not indicative of future results.

6. Bonds (Primary Source for Income)
Taxable fixed income
Bank CDs - safety and insurance
U.S. Treasuries - safety
Corporate - high/medium quality
High yield - lower quality (“junk bonds”)
Tax-exempt
Municipal - federal, state, local
Bonds are the primary source for income requirements. When held to maturity, they can serve as a stabilizing factor to the volatility associated with stocks.
They can generally be divided between taxable and tax-exempt, with a bond’s maturity and credit quality providing a useful measure of its risks and rewards.
But let’s see just how important the concept of low-correlation between stocks and bonds can be

7. Cash (Primary Source for Stability)
Checking Accounts with Interest
Bank Money Market Funds
Mutual Fund Money Market Funds
Taxable
Tax-exempt
Short-Term Bonds (less than one year)
Treasury Bills
Bonds are the primary source for income requirements. When held to maturity, they can serve as a stabilizing factor to the volatility associated with stocks.
They can generally be divided between taxable and tax-exempt, with a bond’s maturity and credit quality providing a useful measure of its risks and rewards.
But let’s see just how important the concept of low-correlation between stocks and bonds can be

8. Investment Plan Basics
Allocate / Invest Funds to Match Your Specific Goals
Diversify Among Various Investment Options / Asset Classes to Reduce Risk
Be Disciplined – Stick to Your Plan
Bonds are the primary source for income requirements. When held to maturity, they can serve as a stabilizing factor to the volatility associated with stocks.
They can generally be divided between taxable and tax-exempt, with a bond’s maturity and credit quality providing a useful measure of its risks and rewards.
But let’s see just how important the concept of low-correlation between stocks and bonds can be

9. Four Step Plan Take a Long Term View Stay Emotionally Balanced
Remain Diversified
Remember Taxes
Asset allocation isn’t sexy. It isn’t something you can brag about. But it does, in our view, reduce the need for a bottle of Pepto within reach at all times. (After all, that’s where “gut instinct” will lead you!)
Asset allocation helps you create a portfolio you can live with.
It can improve your long-term return potential by:
reducing the impact of volatility and risk, and
providing greater relative stability to your portfolio.

10. 1. Take a Long Term View S&P 500 Index – Month-End Values
(January 1950 – December 2005)
(Log. Scale)
War in Iraq
9/11 Attacks
Dollar Hits All-Time Low
Persian Gulf War
Escalation of Vietnam War; Kent State Shootings
Prime Rate Hits 21%
Korean Conflict
Heightens
1987 Market Panic
1962 Market Panic; Cuban Missile Crisis
Price Controls; Nixon Resigns; Oil Embargo
Source: Neuberger Berman and Standard & Poor’s. Please see Additional Disclosures page for complete index description. The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. Indices are unmanaged, and the figures for the index shown do not reflect any fees or expenses. Investors cannot invest directly in an index. We strongly recommend that these factors be considered before an investment decision is made. Past performance is no guarantee of future results.
Please note: This chart is presented in a logarithmic scale, which shows the index’s gains or losses on a percentage basis, for ease of comparison.

11. Stocks Can Be Negative But …
Year to Date - through December 31, 2002 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2
-30%
-20%
-10% 0%
10%
20%
30%
40%
50%
60%
0.0%
31.7%
23.9%
18.4%
-1.0%
52.6%
31.6%
6.5%
-10.8%
43.4%
12.0%
0.5%
26.9%
-8.7%
22.8%
16.5%
12.5%
-10.1%
24.0%
11.1%
-8.5%
3.9%
14.3%
19.0%
-14.7%
-26.5%
37.2%
-7.2%
6.6%
18.6%
32.5%
-4.9%
21.5%
22.6%
6.3%
18.7%
5.3%
16.6%
-3.1%
30.5%
7.6%
10.1%
1.3%
37.6%
23.0%
33.4%
28.6%
21.0%
-9.1%
-11.9%
-22.1%
Percentage Gain or Loss
Copyright © 2003 CRANDALL, PIERCE & COMPANY • All rights reserved. • West Petronella Drive • Libertyville, Illinois 60048 •
• Internet:
Sources: Standard & Poor's Corporation; Copyright © 2003 Crandall, Pierce & Company • All rights reserved.
This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part
including the data contained herein, without prior written permission from Crandall, Pierce & Company.
The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results. 40 53 13
75%
100%
25%
20.94%
13.19%
-10.65%
Positive
All Years
Negative
Number
of Years
Percentage
Average
Return
Asset allocation isn’t sexy. It isn’t something you can brag about. But it does, in our view, reduce the need for a bottle of Pepto within reach at all times. (After all, that’s where “gut instinct” will lead you!)
Asset allocation helps you create a portfolio you can live with.
It can improve your long-term return potential by:
reducing the impact of volatility and risk, and
providing greater relative stability to your portfolio.

12. … Make Money Over Time And ...
S&P 500: 10-Year Rolling Returns
Annualized,
Best 10 Years: %
95th Percentile: %
Median : %
5th Percentile: %
Worst 10 Years: %
Source: Standard & Poor’s, Neuberger Berman. Please see Additional Disclosures page for complete index description.
The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. Indices are unmanaged, and the figures for the index shown do not reflect any fees or expenses. Investors cannot invest directly in an index. We strongly recommend that these factors be considered before an investment decision is made. Past performance is no guarantee of future results.

13. Over the Long Term Outperform
Ending
Value
Average
Return
$13, %
$2, %
$63 5.3%
$18 3.7%
$11 3.0%
Stocks, Bonds, Cash, and Inflation
A 77-year examination of past capital market returns provides historical insight into the performance characteristics of various asset classes.
This graph illustrates the hypothetical growth of a $1 investment in four traditional asset classes, as well as inflation, over the time period December 31, 1925 through December 31, 2005.
Large and small company stocks have provided the largest increase in wealth over this period. The fixed-income investments provided only a fraction of the growth of stocks.
Judging from the ending wealth value, stocks would appear to be the investment of choice. However, these higher returns came with much greater volatility (risk) when compared to the fixed-income investments. Furthermore, small company stocks may be subject to a higher degree of market risk than large company stocks.
Note: The data assumes reinvestment of all income and does not account for taxes or transaction costs. The average return represents a compound annual return. Government bonds and Treasury bills are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest. Stocks are not guaranteed. Small company stocks are more volatile than large company stocks and are subject to significant price fluctuations, business risks, and are timely traded. Underlying data is from the Stocks, Bonds, Bills and Inflation (SBBI) Yearbook, by Roger G. Ibbotson and Rex A. Sinquefield. Updated Annually. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Hypothetical value of $1 invested in 1926.
Source: Ibbotson Associates, Neuberger Berman. Past performance is not indicative of future results.
Small Company stocks represented by the fifth capitalization quintile of stocks on the NYSE for and performance of the Dimensional Fund Advisors (DFA) Small Company Fund thereafter, Large Company Stocks represented by the S&P 500 Index which is an unmanaged group of securities and considered to be representative of the stock market in general; Government Bonds represented by 5-year US Government Bonds; Cash is represented by the 30-day U.S. Treasury Bill. Please note that indices are unmanaged and do not take into account any fees or expenses of investing in the individual securities that they track, and that individuals cannot invest directly in an index. Data about the performance of these indices is prepared or obtained by Neuberger Berman and includes reinvestment of all dividends and capital gain distributions. See Appendix for complete description of each index.

14. 2. Stay Emotionally Balanced
Avoid making rash investment decisions based on breaking news
Recipe for losing money: rushing into the bull market and pulling out of a bear market

15. The Cycle Can Be Difficult
“How could I have
been so wrong?”
“Temporary set back - I’m a long-term investor.”
“Wow, am I smart.”
Excitement
Thrill
Euphoria
Anxiety
Denial
Desperation
Panic
Capitulation
Despondency
Depression
Optimism
Hope
Relief
Fear
Point of Maximum
Financial Opportunity -
Investors Realize
Investment Opportunity
Financial Risk -
Investors Beware of
Higher Investment Risk

16. Mutual Fund Flows – Tech / Telecom
Don’t Follow the Herd
Mutual Fund Flows – Tech / Telecom
($ billions)
March 13, 2000: NASDAQ peaks at 5049
At the height of the technology market bubble, investors flocked to tech funds at precisely the wrong moment
________________
Source: Strategic Insight.
Indices are unmanaged, and the figures for the index shown include reinvestment of all dividends and capital gain distributions and do not reflect any fees or expenses.
Investors cannot invest directly in an index. We strongly recommend that these factors be considered before an investment decision is made. The data presented herein represents securities industry market data as of the date specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. Past performance is not indicative of future results.

17. Avoid Market Timing S&P 500 Index Average Annualized Returns
10 Years Ending December 31, 2005
Annualized Return
Source: Standard & Poor’s, Neuberger Berman
Please see Additional Disclosures page for complete index description. The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. Indices are unmanaged, and the figures for the index shown do not reflect any fees or expenses. Investors cannot invest directly in an index. We strongly recommend that these factors be considered before an investment decision is made. Past performance is no guarantee of future results.

18. Time is On Your Side
Start with $1,000, earning 10% each year and add $1,000 every year

19. Power of Compounding 1986-2005 1986-2005 1996-2005
Power of Compounding It’s easy to procrastinate when it comes to initiating a long-term investment plan. However, the sooner you begin, the more likely it is that the plan will succeed. This image illustrates the effects of compounding over time. Investor A began investing in stocks at the start of 1986, investing $2,000 each year for 20 years. The $40,000 outlay of Investor A grew to $122,505 by year-end 2005.
Investor B postponed investing for 10 years. In 1996, Investor B began investing $4,000 each year in stocks for 10 years. The $40,000 outlay of Investor B grew to $49,436. Investor C began investing in stocks in 1986, investing $2,000 each year for only 10 years. After 10 years, Investor C stopped contributing to the portfolio but allowed it to grow for the next 10 years. The $20,000 outlay grew to $97,787 by year-end 2005.
Note: The data assumes reinvestment of income and does not account for taxes or transaction costs. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Source: Ibbotson Associates — S&P 500, which is an unmanaged group of securities and considered to be representative of the stock market in general.
Investor A Investor B Investor C
Years Contributing: *
Annual Amount Contributed: $2,000 $4,000 $2,000
*Invested from From investment grew. This is for illustrative purposes only and not indicative of any investment. Past performance is no guarantee of future results. Source: Ibbotson Associates. The hypothetical results presented herein are based on historical index returns of the S&P 500. The results do not represent the performance of any Neuberger Berman managed account or product and do not reflect the fees and expenses associated with managing a portfolio. These returns are used for discussion purposes only. They are not intended to represent, and should not be construed to represent a prediction of future rates of return. See Appendix for complete description of each index. Results are on a pre-tax basis. Investment is made at the beginning of each year.
The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Indices are unmanaged, and the figures for the index shown include reinvestment of all dividends and capital gain distributions and do not reflect any fees or expenses. Investors cannot invest directly in an index. We strongly recommend that these factors be considered before an investment decision is made.

20. 3. Remain Diversified Invest Based Upon Your Risk Profile
No One Allocation of Any Type of Investments is Correct for Everyone
Diversify Among Stocks, Bonds and Cash
Have a Mix of Various Types of Stocks
(Growth, Value, Large, Mid, Small, Across Sectors)
If you continue with SWS into the spring semester, please note that we are currently investing only in stocks. However, we recognize that a successful investment portfolio is one that is diversified. We hope that by learning about how to pick stocks in which to invest, students will gain knowledge about evaluating other asset classes as well. In the spring, we anticipate having additional classes on bonds, derivatives, and other more complicated investment tools as well.

21. No Asset Class Leads Every Year
Annual Percentage Returns ( )
Here’s another look at the importance of diversification.
This chart shows the relative performance of a broad range of market segments since 1986.
As you can see, leadership changes quite frequently.
The markets are not static. Diversification is the steady path that can take advantage of the opportunities of investing -- wherever and whenever they occur.
Source: Standard & Poor’s, Frank Russell Co., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Callan Associates.
This is for illustrative purposes only and not indicative of any investment. The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. This material is not intended to be a formal research report and should not be construed as an offer to sell or the solicitation of an offer to buy any security. Indices are unmanaged and the figures for the indices presented herein include reinvestment of all dividends and capital gain distributions and do not reflect any fees or expenses. Investors cannot invest directly in a index. Past performance is not indicative of future results. See Market Index Descriptions in the disclosures at the end of this presentation.

22. Risks & Rewards of Diversification
1 Year Returns – Period Ending 12/31/00
Risks of No Diversification
- Large Cap Growth Stocks %
Small Cap Growth %
Rewards of Prudent Diversification
- Small Cap Value Stocks %
Bonds - Fixed Income %
Large Cap Value %
Source: Frank Russell Co., and Lehman Brothers Holdings Inc. Large Cap Growth - Russell 1000 Growth, Large Cap Value - Russell 1000 Value, Small Cap Value Russell 2000 Value, Fixed Income - Lehman Govt. Corp This is for illustrative purposes only and not indicative of any investment. The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. This material is not intended to be a formal research report and should not be construed as an offer to sell or the solicitation of an offer to buy any security. Indices are unmanaged and the figures for the indices presented herein include reinvestment of all dividends and capital gain distributions and do not reflect any fees or expenses. Investors cannot invest directly in a index. Past performance is not indicative of future results. See Market Index Descriptions in the disclosures at the end of this presentation.

23. When Stocks Are Negative Bonds Tend to Be Positive
This chart shows that many times since 1929, when the S&P 500 turned in a negative performance, bonds actually made money -- sometimes to a surprising overall degree. For example, look at 1974: Long-term government bonds outperformed the S&P 500 by about 30 percentage points! In 2002, long-term government bonds outperformed by nearly 40%.
But this chart is only showing years in which the S&P 500 showed a negative return. The next chart will show that certain categories of bonds have occasionally outperformed all other asset classes -- even in the supposedly Go-go ’90s.
Source: Ibbotson Associates. Selected years shown represent all calendar years from 1929 to 2005 in which the S&P 500 Index had a negative total return.U.S. Long-Term Government Bonds are represented by the 20-year U.S. Government Bond and U.S. Long-Term Corporate Bonds are represented by the Citigroup U.S. Broad Investment Grade Index.Past performance is not indicative of future results. Please note that indices are unmanaged and do not take into account any fees or expenses of investing in the individual securities that they track, and that individuals cannot invest directly in an index. Data about the performance of these indices are prepared or obtained by Neuberger Berman and include reinvestment of all dividends and capital gain distributions. See Appendix for complete description of each index. The data presented herein represents securities industry market data as of the dates specified. It does not represent Neuberger Berman performance nor does it reflect the fees and expenses associated with managing a portfolio. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. This material is not intended to be a formal research report and should not be construed as an offer to sell or the solicitation of an offer to buy any security. A bond’s value may fluctuate based on interest rates, market conditions, credit quality and other factors. You may have a gain or loss if you sell your bonds prior to maturity. Of course, bonds are subject to the credit risk of the issuer. Government bonds and Treasury Bills are backed by the full faith and credit of the United States Government as to the timely payment of principal and interest.

24. Bonds Don’t Always Appreciate
Bond Prices
Interest Rates
If you want to sell a bond before it matures, this means you may have to accept more or less for your bond than what you paid for it, depending on prevailing interest rates. Of course, if you hold your bond until maturity, changes in interest rates won’t affect you---you’ll receive the same interest payment until your bond matures.

25. Longer Term Bonds Tend to Pay Higher Interest Rates to Investors
As of June 30, 2004
POTENTIAL YIELD (%)
This leads us to one of the bond investor’s favorite evaluation tools, the yield curve--a device used by economists and investors to keep track of what’s happening to interest rates.
The yield curve is simply a line graph that charts the differences in yield among municipal bonds at every maturity from one year--at the left end of the curve---to 30 years--the right end point.
Why is the yield curve so important? It can help you evaluate the relative attractiveness of different bonds at the same time it signals what is likely to happen in the economy.
Normally, bond investors demand---and get--a higher yield for bonds with longer maturities. That’s why most of the time the yield curve slants upward to the right.
But the relationship between short- and long-term maturities--and thus the yield curve---changes with each day’s trading. Depending on expectations about interest rates, economic and market news, the yield curve can flatten---and even invert.
MATURITY
Source: Bloomberg. The data presented herein represents securities industry market data as of the date specified. It does not represent the performance of any Neuberger Berman account or product nor does it reflect the fees and expenses associated with managing a portfolio. See Additional Disclosure page.

26. But Long Term Bonds Have Greater Risk
As of June 30, 2004
Rates Down 1%
Rates Up 1%
% PRINCIPAL GAIN
% PRINCIPAL LOSS
5-Year
In addition to the three factors we just discussed, you may also want to consider whether or not the bond is callable.
Many bonds contain call provisions, which means the issuer has the right to redeem the bond prior to its maturity. When a bond is called, the issuer repurchases it at its face value or above--in other words, at a premium.
Usually, a bond is called when market interest rates drop substantially below the rate the bond is paying. In this instance, calling bonds benefits the issuer since it can reissue the bond at the prevailing lower market rate.
If your bond is called, it’s likely you will have to reinvest your money at a lower interest rate. To compensate for this risk, callable bonds often pay higher interest than non-callable bonds with similar maturities and credit quality.
Many municipal bonds offer call protection for the first 5 to 10 years of their term. This means they can’t be called by the issuer during this period.
10-Year
30-Year
*Based on current 5-year ( 3 7/8% 5/15/09), 10-year (4 3/4% 05/15/14), 30-year (5 3/8% 02/15/31) U.S. Treasury Bonds.
Source: CMS BondEdge, Bloomberg. CMS BondEdge simulation assumes instantaneous effect of 100 basis point parallel shift up or down the entire yield curve across all maturities. There can be no assurance the price gains indicated above will actually occur. A bond’s value may fluctuate based on interest rates, market conditions, credit quality and other factors. You may have a gain or loss if you sell your bonds prior to maturity. Of course, bonds are subject to the credit risk of the issuer. Portfolio characteristics are subject to change without notice. Please see Market Index Descriptions and Additional Disclosures page.

27. One Year Returns Total Return: Calendar Years 1950-2002
Largest
Loss
The Consumer Price Index for December 2002 is preliminary.
Data: Rolling 1 year returns using monthly data (624 Observations)
Stocks:
Standard & Poor's 500 Stock Index •
Bonds:
5 Year Treasury Bonds •
Cash:
90-Day Treasury Bills •
Inflation:
Consumer Price Index
Sources: Standard & Poor's Corporation; Ryan Labs, Inc.; Lehman Brothers; Bureau of Labor Statistics; Copyright © 2003 Crandall, Pierce & Company • All rights reserved.
Copyright © 2003 CRANDALL, PIERCE & COMPANY • All rights reserved • West Petronella Drive • Libertyville, Illinois 60048 •
• Internet:
-19.7%
-34.3%
-8.1%
12.4%
18.2%
55.9%
22%
78%
71%
Portfolio Mix:
No Stocks
90% Bonds
10% Cash
Percent of
Year Ending
Average
Percent
Returns Greater
12/02
Return
Gain
Negative
Positive
Than Inflation
90% Stocks
No Bonds
70% Stocks
20% Bonds
60% Stocks
30% Bonds
50% Stocks
40% Bonds
40% Stocks
50% Bonds
30% Stocks
60% Bonds
20% Stocks
70% Bonds
10% Stocks
80% Bonds
11.7%
52.5%
-30.2%
11.1%
49.1%
-26.2%
10.4%
45.7%
-22.2%
9.7%
42.3%
-18.2%
9.0%
38.9%
-14.1%
8.3%
35.5%
-10.1%
7.6%
32.1%
-6.1%
7.0%
28.9%
-3.9%
6.3%
30.2%
-4.2%
80% Stocks
10% Bonds
-16.3%
-7.0%
16.6%
21%
79%
1.0%
-2.2%
9.2% 8%
92%
70%
11.4%
-1.4%
7.2%
10%
90%
64% -
-9.3%
-4.9%
13.5%
17%
83%
-5.9%
-3.7%
12.1%
15%
85%
-2.4%
-2.8%
10.6%
12%
88%
4.5%
-1.9%
8.2% 5%
95%
8.0%
-1.3%
7.4%
This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part
including the data contained herein, without prior written permission from Crandall, Pierce & Company.
The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results.
-12.8%
15.0%
19%
81%

28. Five Year Returns Total Return: Calendar Years 1950-2002
Worst
Return
The Consumer Price Index for December 2002 is preliminary.
Copyright © 2003 CRANDALL, PIERCE & COMPANY • All rights reserved • West Petronella Drive • Libertyville, Illinois 60048 •
• Internet:
-0.1%
-3.2%
-1.2%
12.0%
12.2%
27.4% 2%
98%
82%
2.3%
0.2%
----
10.1%
22.9% 0%
100%
81%
1.5%
-0.9%
10.7%
24.4%
*0%
Portfolio Mix:
No Stocks
90% Bonds
10% Cash
Percent of
Period Ending
Average
Largest
Percent
Returns Greater
12/02
Loss
Gain
Negative
Positive
Than Inflation
70% Stocks
20% Bonds
60% Stocks
30% Bonds
50% Stocks
40% Bonds
40% Stocks
50% Bonds
30% Stocks
60% Bonds
20% Stocks
70% Bonds
10% Stocks
80% Bonds
11.4%
25.9%
-2.1%
9.5%
21.4%
1.3%
8.8%
19.9%
1.9%
8.2%
18.9%
2.1%
7.6%
18.8%
6.9%
18.6%
2.2%
6.3%
18.5%
0.7%
80% Stocks
10% Bonds
-0.7%
11.5% 1%
99%
3.1%
3.9%
4.7%
80%
5.6%
6.4%
7.2%
76% *
Less Than 0.5%
Data: Rolling 5 year returns using monthly data (576 Observations)
Stocks:
Standard & Poor's 500 Stock Index •
Bonds:
5 Year Treasury Bonds •
Cash:
90-Day Treasury Bills •
Inflation:
Consumer Price Index
Sources: Standard & Poor's Corporation; Ryan Labs, Inc.; Lehman Brothers; Bureau of Labor Statistics; Copyright © 2003 Crandall, Pierce & Company • All rights reserved
90% Stocks
No Bonds
This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part
including the data contained herein, without prior written permission from Crandall, Pierce & Company.
The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results.

29. Ten Year Returns Total Return: Calendar Years 1950-2002
The Consumer Price Index for December 2002 is preliminary.
Portfolio Mix:
No Stocks
90% Bonds
10% Cash
Percent of
Period Ending
Smallest
Average
Largest
Percent
Returns Greater
12/02
Gain
Loss
Return
Negative
Positive
Than Inflation
90% Stocks
No Bonds
70% Stocks
20% Bonds
60% Stocks
30% Bonds
50% Stocks
40% Bonds
40% Stocks
50% Bonds
30% Stocks
60% Bonds
20% Stocks
70% Bonds
10% Stocks
80% Bonds
11.3%
18.0%
1.0%
10.8%
17.2%
1.4%
10.2%
16.5%
1.8%
9.7%
15.8%
2.1%
9.2%
15.1%
2.5%
8.7%
14.4%
2.9%
8.1%
14.0%
3.3%
7.6%
13.5%
3.7%
7.1%
13.1%
3.1%
6.6%
12.7%
80% Stocks
10% Bonds
8.0%
---- 0%
100%
81%
7.7%
7.5%
80%
7.3%
6.9%
8.8%
82%
8.2%
8.4%
8.6%
Copyright © 2003 CRANDALL, PIERCE & COMPANY • All rights reserved • West Petronella Drive • Libertyville, Illinois 60048 •
• Internet:
Data: Rolling 10 year returns using monthly data (516 Observations)
Stocks:
Standard & Poor's 500 Stock Index •
Bonds:
5 Year Treasury Bonds •
Cash:
90-Day Treasury Bills •
Inflation:
Consumer Price Index
Sources: Standard & Poor's Corporation; Ryan Labs, Inc.; Lehman Brothers; Bureau of Labor Statistics; Copyright © 2003 Crandall, Pierce & Company • All rights reserved.
This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part
including the data contained herein, without prior written permission from Crandall, Pierce & Company.
The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results.

30. 4. Remember Taxes Income Tax Rate 35.0%
Short-Term Capital Gain Rate 35.0%
Long-Term Capital Gain Rate 15.0%
Unrealized Capital Gain Rate 0.0%

31. Benefits of Tax Deferral
Value at End of Period
Benefits of Deferring Taxes
While it is impossible for individuals to avoid taxes with most investments, it is often possible to defer taxes. Deferring taxes over long periods of time can result in substantial gains.
When holding investments subject to taxation, it is possible to defer taxes by delaying the sale of the investment (not realizing the gain). However, taxes on income, such as coupons or dividends, must be paid annually.
The impact of taxes on an investment portfolio can be significantly reduced through the use of tax-deferred investment vehicles. Examples include: individual retirement accounts (IRAs), company-sponsored 401(k) plans, 403(b) plans, Keogh plans, and tax-deferred annuities. Tax-deferred plans work by allowing interest, dividends, and capital gains to accumulate without incurring taxes. Taxes are due only when the investment is sold (once withdrawals from the plan begin).
This image illustrates how deferring taxes can increase the value of an investment over time. A hypothetical value of $10,000 is invested in both taxable and tax-deferred accounts. The difference is fairly modest after 10 years. However, after 20 years the difference is more substantial. Allowing the investment to grow tax-deferred for 20 years would have provided you with roughly $19,000 (pre-tax) more than the taxable account. After 30 or 40 years, the difference is even more dramatic.
Note: $10,000 is invested in year one. A fully taxable return of 8% is assumed. The investment is taxed at a 35% marginal tax rate. Taxes are assessed yearly on the taxable account but not assessed on the tax-deferred account. Estimates are not guaranteed. Past performance is no guarantee of future results.
Number of Years Elapsed
Source: Ibbotson Associates.
Hypothetical value of $10,000 investment returning 8% annually with a 35% marginal tax rate. The taxable account is taxed every year, while the tax-deferred account is not taxed. Tax-deferred accounts are typically subject to taxation at ordinary income rates upon withdrawal. Estimates are not guaranteed. Past performance is no guarantee of future results. The hypothetical results presented herein are based on historical index data. The results do not represent the performance of any Neuberger Berman managed account or product and do not reflect the fees and expenses associated with managing a portfolio. These returns are used for discussion purposes only. They are not intended to represent, and should not be construed to represent a prediction of future rates of return.

32. Review Tax Efficiency of Investments
Asset Classes Based Upon Various Tax, Return and Risk Characteristics
Strive to Optimize Portfolios to Achieve Risk-Adjusted, Tax-Efficient Returns
Higher Risk
Private
Equity
High Turnover
Equity Management
Low Turnover
Equity Management
High Yield
Bonds
Tax-Efficient
Tax-Inefficient
STRATEGIC
CORE PORTFOLIO
Equity Indexing
Hedge Funds
Municipal Bonds
High Grade Bonds
Lower Risk

33. Prescriptions for Success
Determine Your Investment Objectives:
- Current Holdings
- Long-Term Goals
Time Horizons
Seriously Gauge Your Personal Risk Tolerance
Construct Proper Asset Allocations Based Upon Your Goals
Prudent investors are already prepared for the next bear market. Learning how to manage market uncertainty can help you invest with confidence, no matter what is happening in the world.
Take the long view- The stock market has endured political crises and sharp market drops. In each case, the market eventually recovered to reach new highs.
Stay emotionally balanced- During troubled times, Americans tend to react by feelings. The challenge is not to rely on your feelings but rather remain objective and stick to your investment strategy when making investment decisions. Consider a professional money manager who can offer a balanced and analytical perspective.
Remain diversified- Diversification remains one of the best tools to manage risk. As we have seen throughout much of the 90’s, growth stocks far outperformed value stocks. In the last two years, that trend has been reversed. Because of the dramatic swing in the market lately, you don’t want to have all your eggs in one basket.
Combine income and appreciation potential- While bonds (government, corporate, or municipals) should play an important part in a balanced portfolio, some investors may consider seeking higher returns in “hybrid” securities, also known as bond equivalents such as convertible bonds, convertible preferred bonds, and certain real estate investment trust (REIT).
Look into alternative investments- Qualified investors may be able to invest in “hedge funds” which can minimize volatility in your portfolio. The product uses a variety of strategies such as short selling and long positions to provide low correlation to the market. These strategies are designed to limit exposure to the overall market.
Take advantage of volatility- As dislocations develop from intense market volatility, opportunities will no doubt surface. Numerous market rumors might cause large intra-day swings in the markets however, these inefficiencies can offer opportunities to buy quality stocks for the long term.
Seek professional expertise- High volatile markets and uncertain economic and political conditions make investing more perilous than usual. Investors may benefit from a professional money manager. Professional money management firms have an information advantage over the average individual investor. In today's market, unbiased research may be more useful than ever.

34. Prescriptions for Success
Diversify, Diversify, Diversify
- Stocks, Bonds, Cash
- Large Cap, Mid Cap, Small Cap
Growth and Value
Avoid Emotional Pulls of Short-Term Volatility
Don’t Market Time – Time is On Your Side
Review, Revise, Rebalance Based Upon Life Changes
Prudent investors are already prepared for the next bear market. Learning how to manage market uncertainty can help you invest with confidence, no matter what is happening in the world.
Take the long view- The stock market has endured political crises and sharp market drops. In each case, the market eventually recovered to reach new highs.
Stay emotionally balanced- During troubled times, Americans tend to react by feelings. The challenge is not to rely on your feelings but rather remain objective and stick to your investment strategy when making investment decisions. Consider a professional money manager who can offer a balanced and analytical perspective.
Remain diversified- Diversification remains one of the best tools to manage risk. As we have seen throughout much of the 90’s, growth stocks far outperformed value stocks. In the last two years, that trend has been reversed. Because of the dramatic swing in the market lately, you don’t want to have all your eggs in one basket.
Combine income and appreciation potential- While bonds (government, corporate, or municipals) should play an important part in a balanced portfolio, some investors may consider seeking higher returns in “hybrid” securities, also known as bond equivalents such as convertible bonds, convertible preferred bonds, and certain real estate investment trust (REIT).
Look into alternative investments- Qualified investors may be able to invest in “hedge funds” which can minimize volatility in your portfolio. The product uses a variety of strategies such as short selling and long positions to provide low correlation to the market. These strategies are designed to limit exposure to the overall market.
Take advantage of volatility- As dislocations develop from intense market volatility, opportunities will no doubt surface. Numerous market rumors might cause large intra-day swings in the markets however, these inefficiencies can offer opportunities to buy quality stocks for the long term.
Seek professional expertise- High volatile markets and uncertain economic and political conditions make investing more perilous than usual. Investors may benefit from a professional money manager. Professional money management firms have an information advantage over the average individual investor. In today's market, unbiased research may be more useful than ever.

35. Q&A