F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
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F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
TH E
DISCLAIMER
This presentation is designed to be educational in
nature and is not intended to provide tax or legal advice.
Consult with your tax advisor and/or legal counsel for
suitability for your specific situation.
Rates of return assumed in this discussion are
hypothetical --as are the related projections implied by
these numbers. Rates of return are not guaranteed and
are for illustrative purposes only.
Projected rates do not reflect the actual or expected
performance within any example or financial product.
Disclaimer
F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
INVESTMENTS
A RECENT SURVEY
OF
MARKET VOLATILITY
AN D
RISK REDUCTION
Intro
F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
TH E
STATISTICS
• Because recent market fluctuations, world events,
and long-term uncertainty in global economies, the
use of fixed and indexed investments has grown.
• Risk can now be substantially reduced with the use
of equity index products and the guaranteed return.
Statistics
F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
Source: Lipper Analytical Service
S&P 500 78% out-performs
F1rst F1nanc1al Resources
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$250 1987 1999 1.75
Monthly Margin as % of US Market Cap
Amount of Money Borrowed (billions)
Margin Debt as a
$200 percentage of 1.50
market
$150 capitalization 1.25
$100 1.00
$50 0.75
$25 Margin Debt 0.50
in Billions
1980 1982 1984 1986 1988 1989 1990 1992 1994 1996 1998 00
Operating companies only, no closed-end funds. Bianco Research LLC, NYSE
Source: Wall Street Journal, February 13, 2000
Margin Buying since 1980
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60
50
40
30
20
10
0
-10
-20
-30
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99
Small Capital Company Stock
Large Capital Company Stock
Long T erm Government Bonds
Treasury Bills
Inflation
Source: Ibbotson & Associates, 2000 Yearbook
Market Movements 1975-99
F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
Bear Markets Duration Decline
May 1946 - Mar 1948 22 Months - 28.10 %
Aug 1956 - Oct 1957 14 Months - 21.63 %
Dec 1961 - Jun 1962 6 Months - 27.97 %
Feb 1966 - Oct 1966 8 Months - 22.18 %
Nov 1968 - May 1970 18 Months - 36.06 %
Jan 1973 - Oct 1974 21 Months - 48.20 %
Nov 1980 - Aug 1982 21 Months - 27.11 %
Aug 1987 - Dec 1987 4 Months - 33.51 %
Jul 1990 - Oct 1990 3 Months - 19.92 %
Jan 2000 - Dec 2002 35 Months - 30.10 %
Source: DJIA
Bear Markets Chart
F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
Example A Example B
$1,653,900 $1,791,000
$1,000,000 11%
$1,000,000
$
200K 6%
8%
$
200K
$
200K 1M
$
6%
$
200K
$
200K 4%
Year 1 Year 10 Year 1 Year 10
LOSS
Diversification
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Twenty-First Century Trusted Advisor SM
$1,000,000 - S&P 500 FIXED % - $1,000,000
$1,160,000 +16% 1 +6% $1,060,000
$1,322,400 +14% 2 +6% $1,123,600
$1,428,200 + 8% 3 +6% $1,191,000
$1,214,000 -15% 4 +6% $1,262,500
$1,335,300 +10% 5 +6% $1,338,000
YEAR
$ 1,335,300 $ 1,338,200
Assumes: Net gains based on hypothetical interest crediting rates that are not guaranteed
Comparison of S&P 500 vs Fixed
F1rst F1nanc1al Resources
Twenty-First Century Trusted Advisor SM
TAX
DEFERRED What if the
Dow Jones,
S&P 500 or other
GROWTH
Participate in index goes up?
Market Gains
Guaranteed
3% Return minimum return .
Elimination of Market Risk
TIME
If the Markets
decline rapidly ?
Assumes: Based on 100% participation in selected indicies and a 3% contractual guarantee
S&P 500 ELIA Concept Graphic
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Twenty-First Century Trusted Advisor SM
An S&P 500 % Fixed % Equity Indexed %
Mutual Fund Rate Investment Rate Product S&P
$1,000,000 $1,000,000 $1,000,000
$1,160,000 +16% $1,060,000 + 6% $1,160,000 +16%
$1,322.400 +14% $1,123,600 + 6% $1,322,400 +14%
$1,428,200 + 8% $1,191,000 + 6% $1,428,200 + 8%
$1,214,000 - 15% $1,262,500 + 6% $1,428,200 0%
$1,335,300 +10% $1,338,000 + 6% $1,570,800 +10%
$1,335,300 $1,338,000 $1,570,800
Assumes: 100% participation rate with no dividend or interest reinvestment
Investment Comparison
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