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Kj Asset Allocation Strategy

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Personal Asset Allocation & Financial Plan

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Kj Asset Allocation Strategy

  1. 1. AllocationMaster Report Prepared for Kanya Jaroenvitayasit (Main Scenario) July 19, 2005 Provided by Russell Blumenthal, President Koh Samui Investments LLC 606 Post Road East Westport, CT 06880 +1 203-877-6000
  2. 2. AllocationMaster Kanya JaroenvitayasitTable of Contents Introduction Page .... 3 Risk Tolerance .... 4 Efficient Frontier - Present Mix .... 5 Efficient Frontier - Proposed Mix .... 6 Asset Mix Comparison - Non-Qualified Assets .... 7 Broad Asset Mix Comparison - Non-Qualified Assets .... 8 Asset Mix Backtest - Periodic Returns .... 9 Asset Mix Backtest - Compound Returns .... 10 Projected Assets - Actual Dollars .... 11 Projected Assets - Inflation Adjusted Dollars .... 12 Financial Forecast - Present Mix - Composite .... 13 Financial Forecast - Proposed Mix - Composite .... 14 Financial Forecast - Present Mix - Non-Qualified .... 15 Financial Forecast - Proposed Mix - Non-Qualified .... 16 Financial Forecast - Present Mix - Taxes .... 17 Financial Forecast - Proposed Mix - Taxes .... 18 Simulation Analysis - Range of Returns (After-Tax) .... 19 Simulation Analysis - Target Returns .... 20 Simulation Analysis - Range of Assets .... 21 Projected Assets - Sensitivity Analysis .... 22 Implementation Plan - Proposed Product Mix - Non-Qualified .... 23 Implementation Plan - Uses of Non-Qualified Assets .... 24 Client Data Inputs .... 25 Current Net Worth .... 26 Scenario Assumptions .... 27 Selected Indices - Periodic Returns .... 28 Selected Indices - Compound Returns .... 29 Selected Indices - Scatter Plot .... 30 Importance of Asset Allocation .... 31 The Efficient Frontier .... 32 Glossary - Key Terms .... 33 Snapshot .... 34 Investment Policy Statement .... 35 This asset allocation analysis is provided to you for informational purposes only. Actual investment results may be materially different from the projected performance results portrayed. This report uses information that is considered reliable, but it does not represent that the information is accurate or complete, and the report may not be relied upon as such. The report is not intended to be either an expressed or implied guaranty of actual performance. It is not intended to supply tax or legal advice. There is no solicitation to buy or sell securities. The deduction of advisory fees, brokerage or other commissions, and any other expenses that would have been paid may not be reflected in the analysis. The results portrayed reflect the reinvestment of dividends and other earnings.Prepared by Russell Blumenthal Koh Samui Investments LLC
  3. 3. AllocationMaster Kanya JaroenvitayasitIntroductionAn Asset Allocation Plan will help you determine if you have the right mix of investments for your personalsituation. This report has been prepared to assist you in this important decision.Development of a personalized Asset Allocation Plan provides a disciplined and systematic approach toinvesting. It guides you from defining your personal investment objectives to determining a suitable portfolio.With all of the investment choices available, this plan helps you evaluate the many choices and create awell-designed plan specific to your needs.The purpose of an Asset Allocation Plan is to determine how your investment assets will be divided among theavailable investment alternatives. Your plan will usually depend on your financial objectives, time horizon, risktolerance, and present financial situation.The asset allocation plan presented in this report is based on the Nobel-prize winning concepts of ModernPortfolio Theory, which state that through intelligent diversification you can minimize the effects of investmentrisk. This is because the way you allocate your investment dollars outweighs the potential effects of securityselection and market timing. Through diversification, gains in one investment class may help offset losses inanother.Throughout this plan, you will see references to "expected returns", "standard deviation" and other financialplanning terms that you may not be familiar with. All terms are fully explained in the glossary. Wherereferences are made to expected returns, please remember that this is not intended as a guarantee or meant toreflect the performance of any investment product. It is simply a historical return based on an index. An index isused to show benchmarks for the performance of various asset classes. Investors may not make directinvestments into any index.It is important to keep in mind that the focus of this Asset Allocation Plan is based on your long-termobjectives. These are usually plans that have been made for five years or more. It means taking a reasonableamount of investment risk in the expectation of higher returns. And, since time has a moderating effect oninvestment risk, the longer your investment time horizon, the more likely you will earn a positive return.Following your Asset Allocation Plan can be a critical element in reaching your financial objectives. It shouldbe carefully determined. And, it should be reviewed and rebalanced periodically.Prepared by Russell Blumenthal Koh Samui Investments LLC
  4. 4. AllocationMaster Kanya JaroenvitayasitRisk Tolerance Analysis1 Expected Return: Given historical returns on different kinds of investments, my desired level of investment return is above-average. Strongly Disagree Strongly Agree2 Risk Tolerance: I am willing to bear an above-average level of investment risk (volatility). I can accept occasional years with negative investment returns. Strongly Disagree Strongly Agree3 Holding Period: I am willing to maintain investment positions over a reasonably long period of time (generally considered 10 years or more). Strongly Disagree Strongly Agree4 Liquidity: I do not need to be able to readily convert my investments into cash. Aside from my portfolio, I have adequate liquid net worth to meet major near-term expenses. Strongly Disagree Strongly Agree5 Ease of Management: I want to be very actively involved in the monitoring and decision-making required to manage my investments. Strongly Disagree Strongly Agree6 Dependents: There are none or only a few dependents that rely on my income and my investment portfolio for support. Strongly Disagree Strongly Agree7 Income Source: My major source of income is adequate, predictable and steadily growing. Strongly Disagree Strongly Agree8 Insurance Coverage: I have an adequate degree of insurance coverage. Strongly Disagree Strongly Agree9 Investment Experience: I have prior investment experience with stocks, bonds, and international investments. I understand the concept of investment risk. Strongly Disagree Strongly Agree10 Debt/Credit: My debt level is low and my credit history is excellent. Strongly Disagree Strongly AgreeYour Risk Profile: Mod Aggressive Use of risk tolerance analysis is one approach for helping you select a suitable portfolio. Your risk profile has been determined based on your responses to the risk questionnaire. This information was used to identify a range of portfolios on the Efficient Frontier that may be appropriate for your risk profile.Prepared by Russell Blumenthal Koh Samui Investments LLC
  5. 5. AllocationMaster Kanya JaroenvitayasitEfficient Frontier - Present Mix Efficient Frontier Conservative Mod Conservative Moderate Mod Aggressive Aggressive Present Mix Proposed Mix Suggested Mix Present Asset Allocation Total 100% $325,000 Present Mix Before-Tax Annual Return 6.54% After-Tax Annual Return 6.54% Standard Deviation (Risk) 13.79% Sharpe Ratio 0.29 Annual Yield 1.96%Prepared by Russell Blumenthal Koh Samui Investments LLC
  6. 6. AllocationMaster Kanya JaroenvitayasitEfficient Frontier - Proposed Mix Efficient Frontier Conservative Mod Conservative Moderate Mod Aggressive Aggressive Present Mix Proposed Mix Suggested Mix Proposed Asset Allocation Total 100% $325,000 Present Proposed Before-Tax Annual Return 6.54% 10.10% After-Tax Annual Return 6.54% 10.10% Standard Deviation (Risk) 13.79% 14.64% Sharpe Ratio 0.29 0.52 Annual Yield 1.96% 4.06%Prepared by Russell Blumenthal Koh Samui Investments LLC
  7. 7. AllocationMaster Kanya JaroenvitayasitAsset Mix Comparison - Non-Qualified Assets Present Asset Mix Proposed Asset Mix Present Asset Mix Proposed Asset Mix Adjustment Cash Equivalents $150,000 46.15% $32,489 10.00% ($117,511) U.S. REITs $75,000 23.08% $224,999 69.23% $149,999 Emerging Equities $100,000 30.77% $67,512 20.77% ($32,488) Total $325,000 100.00% $325,000 100.00% Before-Tax Annual Return 6.54% 10.10% After-Tax Annual Return 6.54% 10.10% Standard Deviation (Risk) 13.79% 14.64% Sharpe Ratio 0.29 0.52 After-Tax Annual Yield 1.96% 4.06% This is for illustrative purposes only. Past performance is not an indication of future returns.Prepared by Russell Blumenthal Koh Samui Investments LLC
  8. 8. AllocationMaster Kanya JaroenvitayasitBroad Asset Mix Comparison - Non-Qualified Assets Present Asset Mix Proposed Asset Mix Present Asset Mix Proposed Asset Mix Adjustment Cash and Equivalents $150,000 46.15% $32,489 10.00% ($117,511) Equities $175,000 53.85% $292,511 90.00% $117,511 Total $325,000 100.00% $325,000 100.00% Before-Tax Annual Return 6.54% 10.10% After-Tax Annual Return 6.54% 10.10% Standard Deviation (Risk) 13.79% 14.64% Sharpe Ratio 0.29 0.52 After-Tax Annual Yield 1.96% 4.06% This is for illustrative purposes only. Past performance is not an indication of future returns.Prepared by Russell Blumenthal Koh Samui Investments LLC
  9. 9. AllocationMaster Kanya JaroenvitayasitAsset Mix Backtest - Periodic Returns - Actual Returns 1988 - 2004 Return Risk Present Asset Mix 10.01% 12.24% Proposed Asset Mix 12.20% 15.49% 2004 5 Years 10 Years 15 Years Present Asset Mix 15.51% 8.70% 7.27% 8.66% Proposed Asset Mix 26.21% 17.31% 12.20% 11.84% Backtested performance does not represent actual account performance and should not be interpreted as an indication of such performance. The asset mix that the backtested results are based upon can be changed at any time and will produce different backtested performance. Backtested performance does not represent the impact that material economic and market factors might have on investment decision making. There is no indication that these backtested results could, or would, have been achieved had this asset mix been used during the years presented. The results portrayed reflect the reinvestment of dividends and other earnings. The deduction of advisory fees, brokerage or other commissions, and any other expenses that would have been paid are not reflected.Prepared by Russell Blumenthal Koh Samui Investments LLC
  10. 10. AllocationMaster Kanya JaroenvitayasitAsset Mix Backtest - Compound Returns - Actual Returns 1988 - 2004 Return Risk Present Asset Mix 10.01% 12.24% Proposed Asset Mix 12.20% 15.49% 2004 5 Years 10 Years 15 Years Present Asset Mix 15.51% 8.70% 7.27% 8.66% Proposed Asset Mix 26.21% 17.31% 12.20% 11.84% Backtested performance does not represent actual account performance and should not be interpreted as an indication of such performance. The asset mix that the backtested results are based upon can be changed at any time and will produce different backtested performance. Backtested performance does not represent the impact that material economic and market factors might have on investment decision making. There is no indication that these backtested results could, or would, have been achieved had this asset mix been used during the years presented. The results portrayed reflect the reinvestment of dividends and other earnings. The deduction of advisory fees, brokerage or other commissions, and any other expenses that would have been paid are not reflected.Prepared by Russell Blumenthal Koh Samui Investments LLC
  11. 11. AllocationMaster Kanya JaroenvitayasitProjected Assets - Actual Dollars Present Asset Mix Proposed Asset Mix The Projected Assets shows the projected Asset Value for the Present Asset Mix and the Proposed Asset Mix over the projection period. The graph indicates whether you are expected to have sufficient assets to meet your financial goals. The Asset Value shown is the beginning of year after-tax market value for your combined non-qualified and qualified assets.Prepared by Russell Blumenthal Koh Samui Investments LLC
  12. 12. AllocationMaster Kanya JaroenvitayasitProjected Assets - Inflation Adjusted Dollars Present Asset Mix Proposed Asset Mix The Projected Assets shows the projected Asset Value for the Present Asset Mix and the Proposed Asset Mix over the projection period. The graph indicates whether you are expected to have sufficient assets to meet your financial goals. The Asset Value shown is the beginning of year after-tax market value for your combined non-qualified and qualified assets.Prepared by Russell Blumenthal Koh Samui Investments LLC
  13. 13. AllocationMaster Kanya JaroenvitayasitFinancial Forecast - Present Mix - Composite - Actual Dollars Asset Financial Current Capital Addtl Net $ Date Value Goals Income Gains Taxes Contribs Change 7/ 2005 $325,000 $24,000 $5,602 $13,072 $0 $24,000 $18,675 7/ 2006 $343,675 $24,600 $5,924 $13,824 $0 $24,600 $19,748 7/ 2007 $363,423 $25,215 $6,265 $14,618 $0 $25,215 $20,883 7/ 2008 $384,306 $106,612 $6,625 $15,458 $0 $25,845 ($58,684) 7/ 2009 $325,622 $26,492 $5,613 $13,097 $0 $26,492 $18,711 7/ 2010 $344,332 $27,154 $5,936 $13,850 $0 $27,154 $19,786 7/ 2011 $364,118 $27,833 $6,277 $14,646 $0 $27,833 $20,923 7/ 2012 $385,041 $28,528 $6,637 $15,487 $0 $28,528 $22,125 7/ 2013 $407,166 $29,242 $7,019 $16,377 $0 $29,242 $23,396 7/ 2014 $430,562 $29,973 $7,422 $17,318 $0 $29,973 $24,741 7/ 2015 $455,303 $30,722 $7,849 $18,314 $0 $30,722 $26,162 7/ 2016 $481,465 $31,490 $8,300 $19,366 $0 $31,490 $27,666 7/ 2017 $509,131 $32,277 $8,777 $20,479 $0 $32,277 $29,255 7/ 2018 $538,386 $33,084 $9,281 $21,655 $0 $33,084 $30,936 7/ 2019 $569,322 $33,911 $9,814 $22,900 $0 $33,911 $32,714Prepared by Russell Blumenthal Koh Samui Investments LLC
  14. 14. AllocationMaster Kanya JaroenvitayasitFinancial Forecast - Proposed Mix - Composite - Actual Dollars Asset Financial Current Capital Addtl Net $ Date Value Goals Income Gains Taxes Contribs Change 7/ 2005 $325,000 $24,000 $12,356 $18,369 $0 $24,000 $30,725 7/ 2006 $355,725 $24,600 $13,524 $20,105 $0 $24,600 $33,630 7/ 2007 $389,355 $25,215 $14,803 $22,006 $0 $25,215 $36,809 7/ 2008 $426,163 $106,612 $16,202 $24,086 $0 $25,845 ($40,478) 7/ 2009 $385,685 $26,492 $14,663 $21,799 $0 $26,492 $36,462 7/ 2010 $422,147 $27,154 $16,050 $23,859 $0 $27,154 $39,909 7/ 2011 $462,057 $27,833 $17,567 $26,115 $0 $27,833 $43,682 7/ 2012 $505,739 $28,528 $19,228 $28,584 $0 $28,528 $47,812 7/ 2013 $553,550 $29,242 $21,045 $31,286 $0 $29,242 $52,332 7/ 2014 $605,882 $29,973 $23,035 $34,244 $0 $29,973 $57,279 7/ 2015 $663,161 $30,722 $25,213 $37,481 $0 $30,722 $62,694 7/ 2016 $725,855 $31,490 $27,596 $41,025 $0 $31,490 $68,621 7/ 2017 $794,476 $32,277 $30,205 $44,903 $0 $32,277 $75,108 7/ 2018 $869,584 $33,084 $33,061 $49,148 $0 $33,084 $82,209 7/ 2019 $951,793 $33,911 $36,186 $53,795 $0 $33,911 $89,981Prepared by Russell Blumenthal Koh Samui Investments LLC
  15. 15. AllocationMaster Kanya JaroenvitayasitFinancial Forecast - Present Mix - Non-Qualified - Actual Dollars Asset Financial Current Capital Addtl Qualified Date Value Goals Income Gains Taxes Contribs Transfers 7/ 2005 $325,000 $24,000 $5,602 $13,072 $0 $24,000 $0 7/ 2006 $343,675 $24,600 $5,924 $13,824 $0 $24,600 $0 7/ 2007 $363,423 $25,215 $6,265 $14,618 $0 $25,215 $0 7/ 2008 $384,306 $106,612 $6,625 $15,458 $0 $25,845 $0 7/ 2009 $325,622 $26,492 $5,613 $13,097 $0 $26,492 $0 7/ 2010 $344,332 $27,154 $5,936 $13,850 $0 $27,154 $0 7/ 2011 $364,118 $27,833 $6,277 $14,646 $0 $27,833 $0 7/ 2012 $385,041 $28,528 $6,637 $15,487 $0 $28,528 $0 7/ 2013 $407,166 $29,242 $7,019 $16,377 $0 $29,242 $0 7/ 2014 $430,562 $29,973 $7,422 $17,318 $0 $29,973 $0 7/ 2015 $455,303 $30,722 $7,849 $18,314 $0 $30,722 $0 7/ 2016 $481,465 $31,490 $8,300 $19,366 $0 $31,490 $0 7/ 2017 $509,131 $32,277 $8,777 $20,479 $0 $32,277 $0 7/ 2018 $538,386 $33,084 $9,281 $21,655 $0 $33,084 $0 7/ 2019 $569,322 $33,911 $9,814 $22,900 $0 $33,911 $0Prepared by Russell Blumenthal Koh Samui Investments LLC
  16. 16. AllocationMaster Kanya JaroenvitayasitFinancial Forecast - Proposed Mix - Non-Qualified - Actual Dollars Asset Financial Current Capital Addtl Qualified Date Value Goals Income Gains Taxes Contribs Transfers 7/ 2005 $325,000 $24,000 $12,356 $18,369 $0 $24,000 $0 7/ 2006 $355,725 $24,600 $13,524 $20,105 $0 $24,600 $0 7/ 2007 $389,355 $25,215 $14,803 $22,006 $0 $25,215 $0 7/ 2008 $426,163 $106,612 $16,202 $24,086 $0 $25,845 $0 7/ 2009 $385,685 $26,492 $14,663 $21,799 $0 $26,492 $0 7/ 2010 $422,147 $27,154 $16,050 $23,859 $0 $27,154 $0 7/ 2011 $462,057 $27,833 $17,567 $26,115 $0 $27,833 $0 7/ 2012 $505,739 $28,528 $19,228 $28,584 $0 $28,528 $0 7/ 2013 $553,550 $29,242 $21,045 $31,286 $0 $29,242 $0 7/ 2014 $605,882 $29,973 $23,035 $34,244 $0 $29,973 $0 7/ 2015 $663,161 $30,722 $25,213 $37,481 $0 $30,722 $0 7/ 2016 $725,855 $31,490 $27,596 $41,025 $0 $31,490 $0 7/ 2017 $794,476 $32,277 $30,205 $44,903 $0 $32,277 $0 7/ 2018 $869,584 $33,084 $33,061 $49,148 $0 $33,084 $0 7/ 2019 $951,793 $33,911 $36,186 $53,795 $0 $33,911 $0Prepared by Russell Blumenthal Koh Samui Investments LLC
  17. 17. AllocationMaster Kanya JaroenvitayasitFinancial Forecast - Present Mix - Taxes Tax on Realized Tax on Excise Tax on Tax on Total Date Income Cap Gains Cap Gains Tax Qual W/D NQTD W/D Taxes 7/ 2005 $0 $20,098 $0 $0 $0 $0 $0 7/ 2006 $0 $16,285 $0 $0 $0 $0 $0 7/ 2007 $0 $15,272 $0 $0 $0 $0 $0 7/ 2008 $0 $17,227 $0 $0 $0 $0 $0 7/ 2009 $0 $12,875 $0 $0 $0 $0 $0 7/ 2010 $0 $13,468 $0 $0 $0 $0 $0 7/ 2011 $0 $14,184 $0 $0 $0 $0 $0 7/ 2012 $0 $14,976 $0 $0 $0 $0 $0 7/ 2013 $0 $15,828 $0 $0 $0 $0 $0 7/ 2014 $0 $16,734 $0 $0 $0 $0 $0 7/ 2015 $0 $17,694 $0 $0 $0 $0 $0 7/ 2016 $0 $18,710 $0 $0 $0 $0 $0 7/ 2017 $0 $19,785 $0 $0 $0 $0 $0 7/ 2018 $0 $20,922 $0 $0 $0 $0 $0 7/ 2019 $0 $22,124 $0 $0 $0 $0 $0Prepared by Russell Blumenthal Koh Samui Investments LLC
  18. 18. AllocationMaster Kanya JaroenvitayasitFinancial Forecast - Proposed Mix - Taxes Tax on Realized Tax on Excise Tax on Tax on Total Date Income Cap Gains Cap Gains Tax Qual W/D NQTD W/D Taxes 7/ 2005 $0 $9,680 $0 $0 $0 $0 $0 7/ 2006 $0 $12,310 $0 $0 $0 $0 $0 7/ 2007 $0 $14,756 $0 $0 $0 $0 $0 7/ 2008 $0 $24,382 $0 $0 $0 $0 $0 7/ 2009 $0 $16,459 $0 $0 $0 $0 $0 7/ 2010 $0 $18,326 $0 $0 $0 $0 $0 7/ 2011 $0 $20,291 $0 $0 $0 $0 $0 7/ 2012 $0 $22,383 $0 $0 $0 $0 $0 7/ 2013 $0 $24,629 $0 $0 $0 $0 $0 7/ 2014 $0 $27,055 $0 $0 $0 $0 $0 7/ 2015 $0 $29,685 $0 $0 $0 $0 $0 7/ 2016 $0 $32,546 $0 $0 $0 $0 $0 7/ 2017 $0 $35,664 $0 $0 $0 $0 $0 7/ 2018 $0 $39,066 $0 $0 $0 $0 $0 7/ 2019 $0 $42,782 $0 $0 $0 $0 $0Prepared by Russell Blumenthal Koh Samui Investments LLC
  19. 19. AllocationMaster Kanya JaroenvitayasitSimulation Analysis - Range of Returns (After-Tax) Present Asset Mix Proposed Asset Mix Probability of Exceeding Return 1 year 4 years 8 years 11 years 15 yearsPresent 2% (Median + 2 sd) 44.3% 28.6% 22.8% 19.7% 17.2% 16% (Median + 1sd) 21.1% 14.3% 11.3% 11.1% 10.5% 50% (Median) 3.7% 4.4% 5.0% 5.3% 5.8% 84% (Median - 1 sd) -7.6% -1.6% 0.7% 1.4% 2.3% 98% (Median - 2 sd) -17.0% -5.7% -2.2% -0.8% 0.1%Proposed 2% (Median + 2 sd) 47.2% 29.9% 24.0% 20.8% 18.2% 16% (Median + 1sd) 28.5% 18.5% 15.3% 14.7% 13.7% 50% (Median) 8.2% 8.9% 9.5% 9.4% 9.5% 84% (Median - 1 sd) -5.7% 1.2% 3.9% 4.6% 5.6% 98% (Median - 2 sd) -17.3% -6.4% -0.9% 1.0% 2.0%Note: "sd" = standard deviation The simulated range of average annual returns for the Present and Proposed Composite Asset Mixes are shown over the projection period. The entire range of returns covering the best case to worst case outcomes are represented by the bars. There is a 98% chance of realizing a return that is greater than the simulated worst case return. And, there is a 2% chance of exceeding the simulated best case return. The range of average returns narrows over longer time periods and for more conservative portfolios.Prepared by Russell Blumenthal Koh Samui Investments LLC
  20. 20. AllocationMaster Kanya JaroenvitayasitSimulation Analysis - Target Returns (After-Tax) Present Asset Mix Proposed Asset Mix Probability of Falling Below Target Return (Target Return: 0.00%) 1 year 4 years 8 years 11 years 15 years Present Mix 36.20% 24.20% 10.00% 5.20% 1.60% Proposed Mix 25.80% 11.60% 3.20% 1.20% 0.40% The simulated range of average annual returns for the Present and Proposed Composite Asset Mixes are shown over the projection period. The entire range of returns covering the best case to worst case outcomes are represented. There is a 98% chance of realizing a return that is greater than the simulated worst case return. And, there is a 2% chance of exceeding the simulated best case return. The range of average returns narrows over longer time periods and for more conservative portfolios.Prepared by Russell Blumenthal Koh Samui Investments LLC
  21. 21. AllocationMaster Kanya JaroenvitayasitSimulation Analysis - Range of Assets Present Asset Mix Proposed Asset Mix 1 year 4 years 8 years 11 years 15 yearsPresent Best Case $476,073 $823,818 $1,365,553 $1,968,106 $4,288,503 Expected Case $339,303 $304,793 $382,957 $466,694 $609,621 Worst Case $270,494 $174,083 $188,886 $196,631 $221,689Proposed Best Case $481,101 $848,880 $1,426,536 $2,109,380 $4,226,063 Expected Case $352,560 $373,510 $543,926 $756,597 $1,047,407 Worst Case $266,955 $169,615 $203,444 $236,801 $310,759 The simulated range of projected asset values for the Present and Proposed Composite Asset Mixes are shown over the projection period. The entire range of asset values covering the best case to worst case outcomes are represented by the bars. There is a 98% chance of realizing an asset value that is greater than the simulated worst-case. And, there is a 2% chance of exceeding the simulated best-case asset value. The range of asset values widens over longer time periods and for more aggressive portfolios.Prepared by Russell Blumenthal Koh Samui Investments LLC
  22. 22. AllocationMaster Kanya JaroenvitayasitProjected Assets - Sensitivity Analysis Modified Asset Mix Proposed Asset MixModified Mix Return AdjustmentNon-Qualified: No ChangeQualified: No ChangeNon-Qualified Tax-Deferred: No Change The Projected Assets - Sensitivity Analysis shows the projected Asset Value for the Proposed Mix and a Modified Mix over the projection period. The graph indicates whether you are expected to have sufficient assets to meet your financial goals. The Asset Value shown is the beginning of year after-tax market value for your combined non-qualified and qualified assets.Prepared by Russell Blumenthal Koh Samui Investments LLC
  23. 23. AllocationMaster Kanya JaroenvitayasitImplementation Plan - Proposed Product Mix - Non-Qualified Cash Equivalents U.S. REITs Emerging Equities The Product Recommendations for the Non-Qualified Assets are shown above. The Asset Classes to which each Product Recommendation belongs is identified in the chart. If a Product Recommendation has not been specified, it is listed as "To Be Determined". Products such as mutual funds, variable annuities, and variable life insurance may be part of this recommendation. These products are sold only by prospectus. Please read the prospectus for information concerning features of the products, surrender periods, penalties, fees, and any other internal expenses. A prospectus can be obtained from your investment professional.Prepared by Russell Blumenthal Koh Samui Investments LLC
  24. 24. AllocationMaster Kanya JaroenvitayasitImplementation Plan - Uses of Non-Qualified AssetsProposed Asset Class Product Recommendation Symbol Proposed $ Cash Equivalents To Be Determined $32,489 Total $32,489 U.S. REITs To Be Determined $224,999 Total $224,999 Emerging Equities To Be Determined $67,512 Total $67,512 Shown above are the suggested changes in your Non-Qualified assets that you might want to take in implementing your asset allocation plan. The table has been organized according to the asset classes used in the new Proposed Asset Mix. Any small differences in the dollar amounts are due to rounding-off. Products such as mutual funds, variable annuities, and variable life insurance may be part of this recommendation. These products are sold only by prospectus. Please read the prospectus for information concerning features of the products, surrender periods, penalties, fees, and any other internal expenses.Prepared by Russell Blumenthal Koh Samui Investments LLC
  25. 25. AllocationMaster Kanya JaroenvitayasitClient Data InputsClient Birthdate: 05/09/1963Federal Income Tax Rate: 0.00%State Income Tax Rate: 0.00%Federal Capital Gains Tax Rate: 0.00%State Capital Gains Tax Rate: 0.00%Future Federal Income Tax Rate: 0.00%Future State Income Tax Rate: 0.00%Future Federal Capital Gains Tax Rate: 0.00%Future State Capital Gains Tax Rate: 0.00%Starting Year: 2010 Non-Qualified Assets Market Cost AccountAsset Class Product Name Value Basis Number Hold Symbol Cash Equivalents Savings $150,000 $150,000 No Emerging Equities Thai Stocks $100,000 $100,000 No U.S. REITs Bangkok Lot $75,000 $55,000 No - Not Assigned - $0 $0 No Total $325,000 Financial GoalsOther Accumulation Goals (Pre-Retirement) Description Years Until Need Years of Need Annual Amount Inflation Rate Portion to Fund 1 1 $0 0.00% 100.00% Build Home 3 1 $75,000 2.50% 100.00%Retirement Annual Spending Goal Annual retirement spending goal $24,000 Additional Contributions Starting Amount # of Growth TaxDescription Year Net of Tax Years Rate Status Salary 2004 $24,000 15 Years 2.50% Non-QualifiedPrepared by Russell Blumenthal Koh Samui Investments LLC
  26. 26. AllocationMaster Kanya JaroenvitayasitAssets, Liabilities, and Current Net Worth Current Net Worth Assets Liabilities Net Worth Assets Total Percent Non-Qualified $325,000 100.00% Qualified $0 0.00% Non-Qualified Tax-Deferred $0 0.00% Total Assets $325,000 100.00% Liabilities Total Liabilities $0 0.00% Net Worth Total Net Worth $325,000 100.00%Prepared by Russell Blumenthal Koh Samui Investments LLC
  27. 27. AllocationMaster Kanya JaroenvitayasitScenario Assumptions Scenario Assumptions Asset Class Index Proxy Return Risk Yield Dividend Turnover Cash Equivalents FED 3-Mo T-Bill (S) 1.00% 2.00% 1.00% 0.00% 100.00% T-Notes/CDs FED 6-Month CD 3.50% 3.00% 3.50% 0.00% 100.00% KSI Land NCRF Property Index 25.00% 35.00% 0.00% 0.00% 100.00% KSI Residential (Freehold) NCRF Property Index 18.00% 25.00% 0.00% 10.00% 50.00% KSI Residential (Leasehold) NCRF Property Index 18.00% 23.00% 0.00% 12.00% 25.00% KSI Commercial (Freehold) NCRF Property Index 20.00% 30.00% 0.00% 10.00% 25.00% KSI Industrial NCRF Property Index 22.00% 35.00% 0.00% 10.00% 50.00% KSI Development WILS Real Estate Sec 25.00% 40.00% 0.00% 0.00% 50.00% KSI Mortgages LEHB High Yield 12.00% 16.00% 12.00% 0.00% 100.00% Large Value Stocks WILS Tgt Large Value 9.50% 13.25% 0.00% 2.50% 40.00% Large Growth Stocks WILS Tgt Large Grth 10.60% 16.00% 0.00% 1.75% 40.00% Small Value Stocks WILS Tgt Small Value 11.00% 18.75% 0.00% 2.25% 40.00% Small Growth Stocks WILS Tgt Small Grth 12.10% 22.00% 0.00% 1.50% 40.00% Mid Cap Stocks S&P 400 MidCap 10.75% 18.00% 0.00% 2.00% 40.00% Balanced Funds LIPR Balanced Fund 7.50% 11.00% 3.00% 0.50% 60.00% U.S. REITs NAR REITs-All 11.00% 14.00% 5.50% 0.00% 10.00% Hedge Funds HFRI Equity Hedge 10.00% 10.00% 0.00% 0.00% 20.00% Venture Capital/L.P. CAMB US Venture Cap 12.50% 35.25% 0.00% 0.00% 10.00% International Stocks MSCI EAFE Index-$ 11.00% 22.25% 0.00% 1.75% 40.00% International Bonds CITI World Bnd-All $ 7.00% 13.25% 7.00% 0.00% 40.00% Emerging Equities MSCI Emerg Free-$ 11.50% 40.25% 0.00% 0.75% 40.00% Inflation Rate: 2.50% Holding Limits Non-Qualified Assets Qualified Assets Non-Qualified Tax-Def Assets Asset Class Min % Max % Min % Max % Min % Max % Cash Equivalents 10.00% 25.00% 0.00% 100.00% 0.00% 100.00% T-Notes/CDs 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% KSI Land 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% KSI Residential (Freehold) 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% KSI Residential (Leasehold) 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% KSI Commercial (Freehold) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% KSI Industrial 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% KSI Development 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% KSI Mortgages 0.00% 0.00% 0.00% 25.00% 0.00% 25.00% Large Value Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Large Growth Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Small Value Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Small Growth Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Mid Cap Stocks 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Balanced Funds 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% U.S. REITs 0.00% 100.00% 0.00% 0.00% 0.00% 0.00% Hedge Funds 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Venture Capital/L.P. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% International Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% International Bonds 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Emerging Equities 0.00% 25.00% 0.00% 25.00% 0.00% 25.00%Prepared by Russell Blumenthal Koh Samui Investments LLC
  28. 28. AllocationMaster Kanya JaroenvitayasitSelected Indices - Periodic Returns - Actual Returns 1976 - 2004 Return Risk S&P 500 Composite 13.01% 15.85% LEHB Aggregate Bond 8.97% 7.50% FED 3-Mo T-Bill (S) 6.07% 3.04% CPI-U All Items 4.34% 3.05% 2004 5 Years 10 Years 20 Years S&P 500 Composite 10.88% -2.31% 12.07% 13.23% LEHB Aggregate Bond 4.34% 7.71% 7.71% 8.83% FED 3-Mo T-Bill (S) 1.38% 2.62% 3.80% 4.76% CPI-U All Items 3.25% 2.49% 2.43% 3.00% The annual returns for several market indices are shown over a past time period. The total returns include income and appreciation, but do not consider inflation and taxes. Past performance may not be a good indicator of the future performance, the volatility and the degree of association between asset classes.Prepared by Russell Blumenthal Koh Samui Investments LLC
  29. 29. AllocationMaster Kanya JaroenvitayasitSelected Indices - Compound Returns - Actual Returns 1976 - 2004 Return Risk S&P 500 Composite 13.01% 15.85% LEHB Aggregate Bond 8.97% 7.50% FED 3-Mo T-Bill (S) 6.07% 3.04% CPI-U All Items 4.34% 3.05% 2004 5 Years 10 Years 20 Years S&P 500 Composite 10.88% -2.31% 12.07% 13.23% LEHB Aggregate Bond 4.34% 7.71% 7.71% 8.83% FED 3-Mo T-Bill (S) 1.38% 2.62% 3.80% 4.76% CPI-U All Items 3.25% 2.49% 2.43% 3.00% The compound growth of one dollar invested in each of several market indices is shown for the past several years. Compound growth is the accumulated dollar value assuming the reinvestment of returns. The past total returns shown include both interest and appreciation. They do not reflect taxes and inflation effects. In general, relatively risky asset classes exhibit higher compound growth potential than more conservative asset classes.Prepared by Russell Blumenthal Koh Samui Investments LLC
  30. 30. AllocationMaster Kanya JaroenvitayasitSelected Indices - Scatter Plot 1976 - 2004 Return Risk S&P 500 Composite 13.01% 15.85% LEHB Aggregate Bond 8.97% 7.50% FED 3-Mo T-Bill (S) 6.07% 3.04% CPI-U All Items 4.34% 3.05% The Risk vs. Return scatter plot shows the historical average annual return and risk for several market indices. This graph makes it easy to compare the relative return and risk between different types of investments. The past total returns shown include both current income and capital gains. The returns do not reflect tax and inflation effects.Prepared by Russell Blumenthal Koh Samui Investments LLC
  31. 31. AllocationMaster Kanya JaroenvitayasitImportance of Asset AllocationAsset allocation policy is the main determinant of portfolio total return.A 1991 study by Brinson, Singer and Beebower investigated the determinants of portfolioperformance.¹ By studying the quarterly returns of 82 pension plans over a 10-year period, theyconcluded that: · The selection of which asset classes to invest in and how much to invest in each explained 91.5% of the variation in the plans returns. · The combination of market timing, security selection and other factors accounted for only 8.5% of the differences in the plans returns.¹ Brinson, G.P., Singer, B.D. and G.L. Beebower, "Determinants of Portfolio Performance II:An Update", Financial Analysts Journal, May-June 1991.Prepared by Russell Blumenthal Koh Samui Investments LLC
  32. 32. AllocationMaster Kanya JaroenvitayasitThe Efficient FrontierThe Efficient Frontier traces out the portfolios that offer the greatest amount of return for givenlevels of risk. All portfolios on the frontier are efficient and selection of the proper portfoliodepends upon the investors goals and tolerance for risk.The diagram below illustrates the concept of efficiency. The "Inefficient Portfolio" does not lieon the frontier because an alternate portfolio can be found that offers more return for the sameamount of risk. A second portfolio can be found that offers the same return, but less risk. Bothof these "efficient" portfolios are more desirable to investors trying to maximize return andminimize risk.When calculating the efficient frontier, multiple factors are considered:· Market expectations for return, risk and correlation of assets· Constraints limiting investment in particular asset classes· Your tax ratesPortfolio optimization is a mathematical technique for finding the portfolios that lie along theefficient frontier. These ideas were developed by Dr. Harry Markowitz and earned him a NobelPrize in Economics in 1990. These theories are collectively known as Modern Portfolio Theory.Prepared by Russell Blumenthal Koh Samui Investments LLC
  33. 33. AllocationMaster Kanya JaroenvitayasitGlossary - Key TermsAggressive Investment Posture - Asset mixes that have relatively more risk will often provide higher potentialreturns, with greater uncertainty. Sometimes, aggressive asset mixes do not produce higher returns than moreconservative asset mixes.Asset Allocation - The process of determining what proportions of your portfolio holdings are to be invested inthe various asset classes.Asset Class - A standard term which broadly defines a category of potential investments.Asset Mix - The percentage weightings (or mix) of different asset classes to be held in the portfolio. There maybe separate asset mixes for the taxable and tax-deferred holdings in a portfolio.Conservative Investment Posture - Asset mixes that have relatively low risk in general will often also havelower long-term returns than more aggressive asset mixes, with more certainty.Current Dollars - A forecast of the asset value stated in terms of the actual dollars held, not in terms ofpurchasing power.Efficient Frontier - Plots the asset mixes, ranging from conservative to aggressive, that provide the besttrade-off of risk and return. These "efficient" asset mixes provide (1) the maximum available assumed return fora given level of risk and (2) the minimum available level of risk for a given level of assumed return.Inflation Dollars - A forecast of the asset value measured in terms of purchasing power. Because of inflation,investment dollars will probably not be able to buy as much in the future as they can today.Non-Qualified Assets - Assets that are currently subject to federal, state and local taxes.Qualified Assets - Assets that will be allowed to accumulate tax-free investment earnings until withdrawn atretirement. These assets are normally invested in a 401(k), 403(b), SEP, Keogh or IRA.Risk - The unpredictability of investment returns. The chance that the actual return from investment in an assetclass will be different from its assumed return. Risk is measured statistically using standard deviation.Sharpe Ratio - A measure of incremental assumed return (in inflation dollars) provided by an asset class or assetmix for taking additional risk. Higher values of the Sharpe Ratio are desirable.Standard Deviation - An estimate of the possible future dispersion (or divergence) of the actual returns from aasset class around its expected return. The standard deviation for an asset class represents its estimated averageannual investment risk. Investment risk is based on the notion of uncertainty. The less certain it is that an assetclass will generate its expected return, the higher the risk of that asset class.Total Return - The combined return in current income and capital appreciation from investment in an assetclass.Yield - The current cash income received from investment in an asset class. Bonds provide yield in the form ofinterest payments and stocks through dividends.Prepared by Russell Blumenthal Koh Samui Investments LLC
  34. 34. AllocationMaster Kanya Jaroenvitayasit SnapshotClient Birthdate: 05/09/1963 Proposed MixAssets: Non-Qualified: $325,000 Before-Tax Return 10.10% Qualified: $0 After-Tax Return 10.10% Std. Deviation (Risk) 14.64% Sharpe Ratio 0.52 Annual Yield 4.06% Range of Returns Cash Equivalents $32,489 10.00% U.S. REITs $224,999 69.23% Emerging Equities $67,512 20.77% Total 100.00% Present Asset Mix Proposed Asset Mix Inflows/Outflows Projected AssetsFinancial Goals: Planned Contributions: Build Home Salary Annual retirement spending Present Asset Mix Proposed Asset MixPrepared by Russell Blumenthal Koh Samui Investments LLC
  35. 35. Investment Policy Statement Prepared for Kanya Jaroenvitayasit (Main Scenario) July 19, 2005 Provided by Russell Blumenthal, President Koh Samui Investments LLC 606 Post Road East Westport, CT 06880 +1 203-877-6000
  36. 36. Investment Policy Statement Kanya JaroenvitayasitSECTION 1. SUMMARYThe Investment Policy Statement considers the information you have provided about your present and futurefinancial circumstances. It is to document and ensure the long-term adherence to an investment program. Itcovers the policies, practices and procedures for managing your investment assets.Total Assets: $325,000Time Horizon: 15 yearsReturn Objective: 10.10% (pre-tax gross) 10.10% (after-tax net)Risk Tolerance: Mod AggressiveSECTION 2. OBJECTIVESThese are the main objectives of the investment program. The objectives have been developed in conjunctionwith a review of your financial resources, financial goals, asset allocation, risk tolerance and time horizon.1. To take a reasonable amount of investment risk. To maximize return at that risk level.2. To maintain a prudent diversification of the investment assets.3. To have the ability to meet the financial goals when each is expected to occur.4. To minimize potential tax liabilities.5. To maintain a level of cash reserves in order to meet short-term emergency expenditures.6. To periodically monitor and revise the portfolio as required.Prepared by Russell Blumenthal Koh Samui Investments LLC
  37. 37. Investment Policy Statement Kanya JaroenvitayasitSECTION 3. TIME HORIZONThis investment program is based on an investment time horizon of at least five years. The investment programdoes attempt to consider the active management of short-term investment fluctuations. The asset allocation hasbeen developed as a long-term strategy for the management of your investment assets.SECTION 4. RISK TOLERANCEYour ability to tolerate the uncertainties, complexities and volatility inherent in the investment markets has beenconsidered in the development of your investment program. The risk tolerance assessment for your portfolio isshown in the Summary section. This profile was developed in part through the use of a risk profilingquestionnaire.Some of the main factors that influence your risk tolerance assessment are: (1) Your age; (2) Your presentfinancial condition; (3) Your future financial goals; (4) Your discretionary income and its variability; (5) andseveral other factors. These factors suggest your ability to accept investment risk in order to meet yourlong-term financial goals.SECTION 5. EXPECTED PERFORMANCEThe long-term expected rate of return on your portfolio is shown below. It is based on the expected long-termtotal return for each asset class and its percentage weighting in your portfolio. This is compared against theassumed long-term average rate of inflation (as measured by the Consumer Price Index). The differencebetween your rate of return and the inflation rate is your real (after-inflation) expected return. Actualperformance will vary from these assumed rates. The portfolio return may also be reduced by the deduction ofadvisory, money management, custodial and transaction fees.Portfolio Return Objective: 10.10% (pre-tax gross) 10.10% (after-tax net)Long-Term Inflation Assumption: 2.50%Prepared by Russell Blumenthal Koh Samui Investments LLC
  38. 38. Investment Policy Statement Kanya JaroenvitayasitSECTION 6. HOLDING LIMITSYour portfolio was developed subject to certain holding limitations. These are limitations on the minimum andmaximum percentage investment in each asset class. Holding Limits Non-Qualified Assets Qualified Assets Non-Qualified Tax-Def AssetsAsset Class Min % Max % Min % Max % Min % Max %Cash Equivalents 10.00% 25.00% 0.00% 100.00% 0.00% 100.00%T-Notes/CDs 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%KSI Land 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%KSI Residential (Freehold) 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%KSI Residential (Leasehold) 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%KSI Commercial (Freehold) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%KSI Industrial 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%KSI Development 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%KSI Mortgages 0.00% 0.00% 0.00% 25.00% 0.00% 25.00%Large Value Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%Large Growth Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%Small Value Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%Small Growth Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%Mid Cap Stocks 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Balanced Funds 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%U.S. REITs 0.00% 100.00% 0.00% 0.00% 0.00% 0.00%Hedge Funds 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Venture Capital/L.P. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%International Stocks 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%International Bonds 0.00% 0.00% 0.00% 100.00% 0.00% 100.00%Emerging Equities 0.00% 25.00% 0.00% 25.00% 0.00% 25.00%Prepared by Russell Blumenthal Koh Samui Investments LLC
  39. 39. Investment Policy Statement Kanya JaroenvitayasitSECTION 7. ASSET ALLOCATIONBased on your financial resources, financial goals, time horizon, tax status, holding limitations, risk toleranceand expected investment performance a recommended portfolio has been determined. The portfolio balancesrisk and reward and attempts to achieve the stated objectives of the investment program. The composite assetallocation for your investment program is as shown:SECTION 8. MONITORING AND REVIEWInvestment performance will be monitored and reported to you on a quarterly basis. The investmentperformance of your investment program shall be compared against the appropriate benchmarks. Theinvestment program will be reviewed at least annually to make sure that it continues to achieve your statedobjectives. Since this investment program is long-term in nature, the periodic adjustments made to yourinvestment program should be small.Prepared by Russell Blumenthal Koh Samui Investments LLC
  40. 40. Investment Policy Statement Kanya JaroenvitayasitSECTION 9. REBALANCINGThe percentage weighting to each asset class within the investment portfolio will vary. The percentageweighting within each asset class will be allowed to vary within a reasonable range of +/- 5% to 10% dependingupon market conditions. When rebalancing is required, investment yield and net cash inflows will be used tomeet the strategic asset allocation targets. If cash flow is not sufficient to meet the target allocation for an assetclass, we will decide whether to effect transactions in order to rebalance the asset allocation.SECTION 10. SELECTION CRITERIAInvestment products used to implement the investment program shall be subject to selection criteria. At aminimum, the investment product must be registered, have sufficient historical performance, provide timelycompliant quarterly performance, provide necessary details about the firm (personnel, clients, fees, etc.), andstrictly adhere to a clearly articulated investment philosophy. Each investment product will be monitored foradherence to your investment policy guidelines, major changes in the product, and comparative performancewith similar investment products.Prepared by Russell Blumenthal Koh Samui Investments LLC
  41. 41. Investment Policy Statement Kanya JaroenvitayasitACCEPTANCE AND ADOPTION:I (We) have reviewed, approved and adopted this Investment Policy Statement for the investment programprepared with the assistance of Russell Blumenthal.Clients Signature DateClients Signature DateAdvisors Signature DatePrepared by Russell Blumenthal Koh Samui Investments LLC
  42. 42. AllocationMaster Report Kanya JaroenvitayasitNotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Prepared by Russell Blumenthal Koh Samui Investments LLC

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