The document is a presentation on the fundamentals of investing, covering topics such as the importance of investing, different types of investment options, and how to select among them. It discusses various asset categories, illustrates the impact of inflation and taxes, and explains concepts like total return and diversification. Additionally, it provides hypothetical investment scenarios and highlights the risks associated with market timing and the advantages of mutual funds and annuities.

1. 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

2. The Education of an Investor Business Journal Economic Outlook

3. Agenda • Why invest? • What kinds of investments are there? • How can I use them? • How can I choose among them?

4. Why Invest? Education House Business Retirement

5. Basic Questions When is it going to happen? WHERE IS THE MONEY GOING TO COME FROM? How much is it going to cost?

6. Investment Alternatives Closed-End Bond Funds Mutual Funds Common & Preferred Stock Over-the-Counter Securities Corporate & Convertible Bonds Options Corporate Bond Funds Retirement Plans Government & Agency Bonds Tax-Advantaged Instruments Money Market Instruments Unit Investment Trusts Municipal Bonds Zero Coupon Bonds Wachovia Securities is not a legal or a tax advisor.

7. Categories of Assets • Real Estate • Cash • Bonds • Stocks

8. Categories of Assets • Cash – Certificates of deposit – Money market funds* – Treasury bills** • 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.

9. The Combined Effects of Inflation & Taxes (2003) Initial Investment........................................$10,000 Invest in 6-month CDs for 2003: 1st week of 1/03, offering 1.60% 1st week of 7/03, offering 1.20%................. + 140 10,140 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.

10. The Combined Effects of Inflation & Taxes (2003) Initial Investment.....................................……. $10,000 Invest in 6-month CDs for 2003: 1st week of 1/03, offering 1.60% 1st week of 7/03, offering 1.20%...............….. + 140 10,140 Less Federal income taxes (highest bracket, 35%)..............................…… - 49 10,091 Wachovia Securities is not a legal or tax advisor.

11. Initial Investment............................................ $10,000 Invest in 6-month CDs for 2003: 1st week of 1/03, offering 1.60% 1st week of 7/03, offering 1.20%................… + 140 10,140 Less Federal income taxes (highest bracket, 35%)..................................… - 49 10,091 Adjust for inflation (CPI): 2.28%....…...….….… - 230 $ 9,861 In real terms, this investment lost 1.4%. 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.

12. Categories of Assets • Bonds – U.S. Government bonds – Corporate bonds – Municipal bonds • Real Estate • Cash – Certificates of deposit – Money market funds – Treasury bills • Stocks

13. Interest Rates and Your Bonds Bonds sell at a Premium Bonds sell at a Discount % Interest Rates $ Bond Prices % Interest Rates $ Bond Prices

14. Categories of Assets • Stocks – “ Blue chip” or large company stocks – Smaller company stocks – International stocks – Growth Stocks – Value stocks – Preferred stocks • Real Estate • Cash Certificates of deposit Money market funds Treasury bills • Bonds U.S. Government bonds Corporate bonds Municipal bonds Neither this information nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any securities mentioned.

15. What Is Total Return? Capital Appreciation Dividend Income Total Return 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.

16. Categories of Assets • Cash • Bonds • Stocks

17. 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% Inflation is measured by the Consumer Price Index (CPI). Cash equivalent returns are for one-month Treasury bills. Treasuries are guaranteed by the Government as to the timely payment of principal and interest when held to maturity; equities are not. Cash equivalents are the most conservative of all asset classes. Long-term government bond returns are measured using a constant one-bond portfolio with a maturity of about 20 years. Large company stock returns are based on the S&P Composite, a market-weighted, unmanaged index of 500 stocks (currently) in a variety of industries. Stocks are generally more volatile than bonds. Small company stock returns for 1926-80 are based on stocks in the 5th quintile of the NYSE. Thereafter, returns are based on the DFA Small Company Fund. Small company stocks are generally more volatile than large company stocks. 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

18. Inflation and Taxes Year-end 1925-2002 Year-end 20021 value of $1.00 invested at the end of 1925 (highest tax bracket) 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.

19. 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

20. 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

21. Asset Class Volatility How consistent are the average annual returns? Asset X Asset Y 10% Annual Return Time Annual Return Time 10%

22. Diversification and Its Effect on Risk Negative Correlation

23. Determinants of Portfolio Performance Market Timing 1.8% 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.

24. Tax-Deferred Compounding Age at first investment: 30 40 Years contributing: 10 25 Total investment: $20,000 $50,000 Assets accumulated at retirement (age 65): $214,301 $159,909 Assumed return: 8% 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

25. Dollar-Cost Averaging $300 1 $20 15 300 2 10 30 300 3 15 20 300 4 20 15 $1200 80 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.

26. Mutual Funds • A diversified portfolio of securities • Professional money management • Particular investment objective Growth Income Balanced Money Market Aggressive Growth Growth & Income

27. Mutual Fund Styles Depending on when you’ll need the money Aggressive Growth 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.

28. Annuities Investor Premium $ Insurance Company Beneficiary Insurance Company Payout 1999 2005 2011 2017 2023 Tax Deferred Accumulation Period $

29. Taxable Equivalent Yield (2002-03) 5.48 5.71 6.15 6.51 6.85 7.14 7.69 8.14 8.22 8.57 9.23 9.77 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.

30. Laddering Diversify Your Bonds by Maturity 4 to 5 years $10,000 3 to 4 years $10,000 2 to 3 years $10,000 1 to 2 years $10,000 0 to 1 years $10,000

31. Sample Portfolio Allocations Decisions have to be made for the individual 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

32. Personal Financial Architect ®

33. Personal Financial Architect Questionnaire

38. An Education Never Really Ends Business Journal Economic Outlook

39. One-on-One Financial Session