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3	"1" 1. Risk and return are related. The asset allocation of indexes, based on three risk factors, explain 95% of stock market returns. Speculation on future price movements is not a reliable source of returns, because future prices are unpredictable. Academic studies show that trying to pick stocks, times, managers or styles lowers returns compared to an appropriate yardstick, such as a routinely rebalanced portfolio of index funds. This is because markets are random and efficient. The stock market moves in an unpredictable and random manner and assets are fairly priced at all times based on all known and perceived information. Only new and unknown information changes the price. The three priced risk factors are exposure to market, size and value. 2. Optimal returns are obtained when an investor’s risk exposure matches their risk capacity. Risk capacity can be measured with a survey and risk exposure with 35 yrs or more of risk and return data. 3. Portfolios of index funds from Dimensional Fund Advisors best capture the three risk factors and create optimal and highly efficient portfolios. (only available through approved investment advisors) The number one rated DFA funds are the most cost effective way to achieve the highest expected return for a specified level of risk. Comparisons of portfolios are based on projected risk, return, fees, and taxes, based on 20 yrs or more of data. Diversification is the antidote to uncertainty. Concentrated investments add risk with no additional expected return.
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25	"During the last 5 years..." During the last 5 years (through May 2001), the S&P 500 returned an annual 15%. But 9 of the 10 weight-averaged classes of hedge funds monitored by CSFB Tremont delivered sub-S&P returns, after fees. Over ten years hedge funds look even worse. According to MarHedge,..of its 14 major hedge fund categories only 1... beat the S&P's 18% return from 1990 through the middle of last year, and it did so by a rounding margin.
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31	"Numerous “silent partners" Numerous “silent partners” take bites out of your investments, these can include: Sales agent or stock broker Federal/state tax Fund manager Accountants Investment advisory fees Market makers Transfer agents Mutual fund distributors Brokerage firms
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45	"The Five Dimensions of Risk..." The Five Dimensions of Risk Capacity The Five Factor Model * Time horizon and liquidity needs: how rapidly you may need to withdraw money from your investments Net worth: your capacity to take various levels of risk with your investments Investment knowledge: your understanding of the 12-Step Program to Index Funds Income and savings rate: your excess income and your ability to add to savings Attitude toward risk: your feelings about risk (“the possibility of loss”)
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58	"Know that you’ve invested like..." Know that you’ve invested like the money managers of the world’s largest pension funds. No need to fret over individual stock prices, picking the top managers, or worrying about the ups and downs of the market.
59	"Index Funds Advisors" Index Funds Advisors, Inc. Fee-Only SEC Registered Investment Advisor Approved by DFA to purchase their institutional priced and styled index funds for our clients Custodians: Charles Schwab & Company, Inc. and Fidelity Investments $270 million in assets under management 1,000 accounts On the web at www.ifa.com Toll Free: 888-643-3133
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