ETF Seminars 2007 What’s So Great About ETFs? Phil Ochs, Senior Financial Advisor, host Tuesday, June 12, 5:00-6:30 H&R Block, Cupertino

© 2007 Phil Ochs2 What is an ETF (Exchange Traded Fund) ? A basket of securities that closely follows the securities of the index they track – the same weighted set, or a formula equivilant. The fund manager can make the basket bigger or smaller all day which keeps the fund value very close to market / index value. The basket is structured as an exchange, and investors buy and sell without triggering a tax gain or loss.

© 2007 Phil Ochs3 How is an ETF different from a Mutual Fund ? Tax efficiency Pricing efficiency Lower expense ratio graphics from: Introduction to Exchange Traded Funds, iSHARES

© 2007 Phil Ochs4 Why are ETFs at the heart of a portfolio? Since a fund represents an entire sector or index, they are diversified by their very structure, a common strategy to decrease risk. Funds can be selected across multiple benchmark categories – capitalization, global / international by sector or country, fixed, etc. Just one fund gives an investor a position in an entire market.

© 2007 Phil Ochs5 Provide balance with sectors that respond differently to market cycles than the traditional investments Offset the risk of an exposed position with long / short funds Further diversify long-term investments How do ETFs expand a traditional portfolio?

© 2007 Phil Ochs6 Actively managed funds attempt to improve the weighting or securities mix to do better than the index benchmark The investors use specific sector funds to quickly take a position in a target sector and add growth to the portfolio Although a growth strategy always introduce risk into the portfolio, an ETF fund remains diversified and price efficient in structure. How can ETFs work to beat index performance?

© 2007 Phil Ochs7 An ETF adds both simplicity and precision to your portfolio, as an entire sector or market index position can be taken with one fund. Relative to mutual funds, an ETF is pricing and tax efficient, with a low expense ratio. Your financial advisor uses ETFs to execute both value and growth strategies, offset or balance risk positions, span capitalization markets, and include both global and fixed income elements. Asset allocation can take advantage of these expanded portfolio elements to align closely with individual investor goals. ETF Take-Aways

© 2007 Phil Ochs8 ETF News Links every month ETF Seminars every other month Call / Phil for more information Full ETF Investment Program through Phil, 10 years as an ETF specialist, disciplined approach to ETF portfolio strategy, personalized asset allocation to meet individual needs and goals. Thank you for your interest !

© 2007 Phil Ochs9 To invest successfully does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework. Warren Buffett