Fund2004

Welcome Fundamentals of Investing Presenter Presentation Date COPYRIGHT Wachovia CONFIDENTIAL © 7/2003 Wachovia Securities, LLC, member NYSE and SIPC. The Prudential service marks are owned by The Prudential Insurance Company of America and are used herein under license. A067471

The Education of an Investor Business Journal Economic Outlook

Agenda ,[object Object],[object Object],[object Object],[object Object]

Why Invest? Education House Business Retirement

Basic Questions ,[object Object],[object Object],[object Object],[object Object],[object Object],How much is it going to cost?

Investment Alternatives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Categories of Assets ,[object Object],[object Object],[object Object],[object Object]

Categories of Assets ,[object Object],[object Object],[object Object],[object Object],• Real Estate • Bonds • Stocks *An investment in any money market fund is neither insured nor guaranteed by the FDIC or any government agency. Although the fund seeks to preserve the value of your investment at $1.00/share, it is possible to lose money by investing in the fund. **Guaranteed by the full faith and credit of the U.S. Government for the timely payment of interest and principal if held to maturity.

The Combined Effects of Inflation & Taxes (2003) ,[object Object],[object Object],[object Object],This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment nor is it indicative of future results.

The Combined Effects of Inflation & Taxes (2003) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The Combined Effects of Inflation & Taxes (2003) Certificates of Deposit offer a fixed rate of return and are insured up to $100,000 by the FDIC.

Categories of Assets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],• Stocks

Interest Rates and Your Bonds ,[object Object],[object Object],% Interest Rates $ Bond Prices % Interest Rates $ Bond Prices

Categories of Assets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Neither this information nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any securities mentioned.

What Is Total Return? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],STOCK = = 10% = = 4% = 14% $5 $50 $2 $50 $55 $50 $2 STOCK Jane Miller $2.00 Two Dollars and 00/100 Janet Smith April 1, 1997 Pay to the Order of Dividend Payment This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment, and is not indicative of future performance.

Categories of Assets ,[object Object],[object Object],[object Object]

Investment Performance After 77 Years value at year-end of $1 invested at year-end 1925 End Value $10 $17 $60 $1,775 $6,816 Avg. Return 3.1% 3.8% 5.3% 10.2% 12.1% ,[object Object],[object Object],[object Object],[object Object],[object Object],Hypothetical value of $1 invested at year-end 1925. Assumes reinvestment of income and no transaction costs or taxes. The indices are presented to provide an under-standing of the historical long-term performance of stocks and are not presented to illustrate the performance of any security. You cannot directly invest in an index. Source: Ibbotson Associates

Inflation and Taxes Year-end 1925-2002 ,[object Object],[object Object],[object Object],Long-Term Govt. Bonds Treasury Bills S&P 500 Stocks $0.52 $2.03 $2.50 $30.35 Municipal* Bonds *Our benchmark for municipal bond returns is an average of returns on all municipal bonds rated Baa or better in each year of the period. Source: Ibbotson Associates, 2003. This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment, and is not indicative of future performance.

Asset Class Winners & Losers Ten Years, 1993 - 2002 number of years with the best worst Asset Class returns 2nd 3rd 4th returns 30-day T-bills 0 4 0 4 2 Long-Term Govt. Bonds 2 0 5 0 3 Large Stocks 4 0 1 4 1 Small Stocks 2 4 3 0 1 International Stocks 2 2 1 2 3 Source: Ibbotson Associates, 2003

Dangers of Market Timing Hypothetical Value of $1 Invested from Year-End 1982 - 2002 S&P 500 Treasury Bills $10.94 $3.00 $2.79 S&P 500 minus 16 best months Source: Ibbotson Associates

Asset Class Volatility ,[object Object],Asset X Asset Y 10% Annual Return Time Annual Return Time 10%

Diversification and Its Effect on Risk Negative Correlation

Determinants of Portfolio Performance ,[object Object],Asset Allocation Policy 91.5% Security Selection 4.6 % Cross Product Results 2.1 % This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment and is not indicative of future performance. Source: Bryson, Singer, and Beebower, Financial Analysts Journal , May-June 1991, “Determinants of Portfolio Performance: An Update.” Note: Cross Product Results are attributed to interactions of the three variables: asset allocation, market timing and security selection.

Tax-Deferred Compounding ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Investor A Investor B This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment and it is not indicative of future performance. Age $214,301 $159,909 30 40 50 60 65

Dollar-Cost Averaging ,[object Object],[object Object],[object Object],[object Object],[object Object],Net Amount Invested Quarter Purchase Price Shares Acquired Total: Average price per share: ([$20 + $10 + $15 + $20] /4) Your average cost per share: ($1200/80 shares) This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment and it is not indicative of future performance. $16.25 $15.00 Dollar cost averaging does not assure a profit or protect against loss in declining markets. Because such a strategy involves periodic investment, you should consider your financial ability and willingness to continue purchases through periods of low price levels.

Mutual Funds ,[object Object],[object Object],[object Object],Growth Income Balanced Money Market Aggressive Growth Growth & Income

Mutual Fund Styles Depending on when you’ll need the money ,[object Object],[object Object],Growth Growth & Income Balanced Income Money Market Horizon Higher Risk (Long-Term) Lower Risk (Short-Term) Please call for a free prospectus on any mutual fund offered through Wachovia Securities, containing complete information, including all charges and expenses. Read the prospectus carefully before you invest or send money.

Annuities ,[object Object],Premium $ Insurance Company Beneficiary Insurance Company Payout 1999 2005 2011 2017 2023 Tax Deferred Accumulation Period $

Taxable Equivalent Yield (2002-03) ,[object Object],[object Object],[object Object],27% 30% 35% 38.6% 4% 5% 6% Taxable Equivalent Yield by Tax Bracket Federal Tax-Free Yield = = = This chart is for illustrative purposes only and does not imply past or future performances of any investment.

Laddering Diversify Your Bonds by Maturity ,[object Object],[object Object],[object Object],[object Object],[object Object]

Sample Portfolio Allocations ,[object Object],[object Object],This hypothetical example is provided for informational purposes only. It is not intended to represent any specific investment and is not indicative of future performance. Bonds Bonds Bonds Stocks Stocks Stocks Cash Equivalents Cash Equivalents Cash Equivalents

Personal Financial Architect ®

Personal Financial Architect Questionnaire

An Education Never Really Ends Business Journal Economic Outlook

One-on-One Financial Session

Fund2004

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