1. The Second Quarter in Review2
The Second Quarter in Review
According to Transamerica Investment Management, LLC, May 2009, marked the 18th month of a recession that began in December 2007, making the present downturn the lengthiest in the post-Depression. Proactive government response is having some effect on easing the strain in the financial system.
During the second quarter, the U.S. and foreign governments continued to take increasingly aggressive and, in some cases, unprecedented monetary and fiscal steps to contain the financial crisis. The impact from the credit crisis has now transitioned into the reality of significantly slower economic growth globally. The use of debt by individuals and financial institutions has decreased. Individuals have reduced debt levels, out of fear of job loss, anxiety over home-price, and stock-market declines. Financial institutions are reducing debt loads as well, reflecting the need to mend damaged balance sheets and restore confidence in the financial system. Some of the retrenching in the private markets; however, is being offset by government spending which lessens the negative pressures.
The unemployment rate increased from 8.5% at the end of the first quarter to 9.5% in June. Job losses were widespread across the major industry sectors, with declines in manufacturing, professional and business services, and construction, according to the U.S. Bureau of Labor Statistics.
Globally, many economies are starting to rebound. The latest readings show Japanese industrial production up 8%, Ireland’s retail sales up 9%, and China’s steel production up 25%. However, China warned that other countries are issuing all types of protectionist measure. At the end of June, exports plunged 26% from a year ago.
On a positive note, the stock market has rallied by more than 26% since March 9th. The financial sector led the rally after bellwether banks reported returns to profitability. Positive earnings in other sectors contributed as well.
Transamerica Investment Management, LLC believes the rate of economic decline is moderating and that a new economic cycle will develop by early 2010.
Let’s move on and see how the market did in the second quarter.
Source: Transamerica Investment Management, LLC
“Outlook, Spring/Summer,” and Federated, “Economic and Market Update, June 26, 2009.”
© 2009 Transamerica Corporation. All rights reserved.
FOR EDUCATIONAL USE ONLY 1

2. Second Quarter Results As of June 30, 2009
Bond Market 1.78%
Stock Market 15.93%
During the second quarter, the Barclays Capital Aggregate Bond Index increased by 1.78 and the S&P 500 Index increased by 15.93%.
There was significant growth in the equities market during the second quarter of There is cautious optimism that this positive trend will continue.
It is important to keep in mind that an investment cannot be made directly in an index. An index is unmanaged and does not take into account the fees and expenses associated with an actively managed fund, so performance may differ. Past performance is not a guarantee of future results.
*The Bond Market percentage is based on the “Barclays Capital Aggregate Bond Index.” The Stock Market percentage is based on the “S&P 500 Index”. Please see slide 31 for additional disclosures. 2
© 2009 Transamerica Corporation. All rights reserved. 2

3. Annual Stock Market Returns
vs.
10 and 50-Year Averages
10-year stock average
is approximately 6%
In the late 1990s and for several of the years before 2008, stocks experienced remarkable returns of 10% to 30%, but we were warned that these returns were not sustainable. At that time, Transamerica Retirement Services encouraged participants to focus on the long-term average return of the stock market.
Based on historical cycles and returns, markets over the long-term, tend to revert to the mean/average returns. It is unlikely that the negative returns would persist.
It is important to keep in mind that an investment cannot be made directly in an index. An index is unmanaged and does not take into account the fees and expenses associated with an actively managed fund, so performance may differ. Past performance is not a guarantee of future results.
*Source: Morningstar, Inc. 50-year average is 9.2%, not the 20% to the 30% returns we experienced in the late 90s, nor the negative returns we experienced the years prior to 2003, or over the last 18 months. Please see slide 31 for additional disclosures. 3
© 2009 Transamerica Corporation. All rights reserved. 3

4. Stock Index Returns
Over the second quarter, many large companies, as measured by the Russell 1000® faired extremely well. The value index, which is heavier in financial stocks provided returns which were markedly improved over the first quarter of 2009.
This chart shows the returns of some of the major U.S. equity indices for the second quarter of Value stocks, as measured by the Russell 1000® Value Index, increased by 16.70% while Growth stocks, as measured by the Russell 1000® Growth Index, increased by 16.32%. The Russell 1000® Index (indicative of Blend-Value and Growth large-cap performance) increased by 16.50%, and the Russell 2000® Index (small-cap performance) increased by 20.69%.
It is important to keep in mind that an investment cannot be made directly in an index. An index is unmanaged and does not take into account the fees and expenses associated with an actively managed fund, so performance may differ. Past performance is not a guarantee of future results.
Source: Morningstar, Inc. Data as of June 30, Please see slide 31 for additional disclosures. 4
© 2009 Transamerica Corporation. All rights reserved. 4

5. Bond Index Returns More Conservative More Aggressive 5
It should be noted that although bonds offer a coupon rate, the returns today are influenced mostly by negative price changes caused by declining expectations of future economic activity; and therefore, higher required risk premiums.
Over the course of the quarter, bond index returns gradually increased. High yield bonds which started to rebound in the first quarter of 2009, continued on that trend throughout the second quarter.
This chart shows the returns of some of the major bond indices. 3-Month Treasuries, as measured by the Citigroup 3-Month Treasury Bill Index, increased by 0.05%. Short-term Government Bonds, as measured by the Merrill Lynch 1-3 Year Treasury Index, decreased by 0.11%. Intermediate Government Bonds, as measured by the Barclays Capital Intermediate Government Bond Index, decreased by 1.44% for the quarter. The Barclays Capital Aggregate Bond Index, increased by 1.78%. High Yield Bonds, as measured by the Credit Suisse First Boston Global High Yield Index, increased by 20.23%.
It is important to keep in mind that an investment cannot be made directly in an index. An index is unmanaged and does not take into account the fees and expenses associated with an actively managed fund, so performance may differ. Past performance is not a guarantee of future results.
*Source: Morningstar, Inc. Data as of June 30, Please see slide 32 for additional disclosures. 5 5

6. Source: Transamerica Investment “Outlook, Spring/Summer 2009."
Inflation
─Tame currently
─Anticipated to rise; possibly in 2010
Mortgage rates
─Expected to continue declining
Economic recovery
─Likely toward the end of the year, as the Fed
and the government stimulus begins to take
effect. GDP may start moving into positive
territory.
Unemployment
─Anticipated to continue rising, if negative
news persists
Corporate Profits
─Still negative on year-over-year basis. May start moving
into positive territory by the 4th quarter.
According to Transamerica Investment Management, LLC, fiscal and monetary stimulus will continue to play a leading role in an economic recovery. The United States was the first and most aggressive with fiscal and monetary policy responses to the crisis. They anticipate that the total cost of the fiscal stimulus may exceed $8 trillion over the long term, leading ultimately to increased inflationary pressures.
Towards the end of 2009, the decrease in inventories, may start reversing; which, may boost economic growth. Inflation and interest rates are due to rise.
The government’s efforts to lower mortgage rates should make homes more affordable and offer refinancing opportunities. Housing will be a key to achieving economic recovery. Stabilization of the housing market must occur before banks and consumers can regain and maintain confidence.
The US economy is expected to begin growing in the second half of this year, while the jobless rate is expected to peak in the first quarter of 2010.
Transamerica Investment Management, LLC. believes the rate of economic decline is moderating and that a new economic cycle will develop by early 2010.
Source: Transamerica Investment
Management, LLC
“Outlook, Spring/Summer 2009." 6
© 2009 Transamerica Corporation. All rights reserved. 6

7. Investment Strategies During Volatile Times3
So, what are you supposed to do with this information? Since we don’t know for sure which direction the market is going to head, how do we know how to invest during these volatile times? Let’s take a look.

8. Focus on the Long-term
Market ups and downs may be unsettling, but try to avoid reacting emotionally
Selling out of investment choices that have under-performed means “locking in your losses”
Moving into investment choices that have outperformed means “buying high”
Instead, use this time to:
Revisit your long-term asset allocation strategy
Rebalance your portfolio to underperforming asset classes, or shift future contributions to these share classes
Consider strategic allocation investment choices
First of all, remember that you are investing for the long-term. Assuming that your reason for saving hasn’t changed and that you are saving for retirement and have a well-balanced portfolio, you may want to sit tight. Try not to act on emotion. You may lock in losses if you transfer out of lower performing investment choices and into higher performing ones, since this may result in buying high. Instead use this time to review your long-term asset allocation strategy to makes sure it still satisfies your goals for retirement. Rebalance your portfolio if necessary…but don’t lose sight of your long-term goals when evaluating your strategy.

9. An example of long-term investing
45 years old investor
20 years until retirement
$100,000 retirement balance
Contributes $5,000 annually
500 shares at $10 a share and an annual
return of 7%
At age 65: $100,000 balance would grow to
$606,294
With the disappointing returns during the latter part of 2008 and the first quarter of 2009, it is tempting to want to move out of the market. But cashing out when the market is down can be a costly decision. That is because markets tend to rebound, eventually. As reported by the S&P 500, during the first quarter of 2009, the stock market decreased by 11.01%. However, the market has been showing signs of a rebound. In the second quarter of 2009, the S&P 500 increased by 15.93%. The market volatility may be unsettling; however, it is important to focus on your long-term objective.
Here is a hypothetical example of a 45-year old investor with a retirement balance of $100,000. This investor’s strategy is to continue saving $5,000 annually. Assuming a 7% rate of return, his balance will grow to $606,294 by the time he reaches the age of 65.
Since 1957, the S&P 500 Index, has had average declines of 34% during bear markets, but it has risen 175% during subsequent market advances. It is important to keep your emotions in check. Instead of reacting to the ups and downs in the economic cycle, investors should stay focused on their long-term strategy. .
Source: Diversified Investment Advisors, Inc., “Learning to Like Market Lulls, 09/08” and Standard & Poor’s, “Market Alert, January 2008.”

10. Investing Wisely Diversify Rebalance Educate yourself
Avoid senseless urgency to act
Don’t try to time the market
Invest to achieve a long-term goal–not to avoid a short-term loss
A bear market is a market showing a lack of confidence. Prices hover at the same price then go down, indices fall too and volumes are stagnant. In a bear market people are waiting for the bulls to start driving the prices up again.
During a bear market you may want to do nothing. In other words, avoid the urgency to act on the urges you may feel to jump out of the market when it is low. This kind of action tends to create larger losses over the long haul. As a long-term investor, you may want to invest to achieve a long-term goal and not to avoid a short-term loss.
You may wish to consider investing in a mix of stocks, bonds, and cash investments, which you can, after consulting with your qualified investment advisor, tailor your objectives, time horizon, tolerance for risk, and financial situation. In a bear market, cash may provide stability. Bonds may offer steady income and may also serve to balance out swings in stock prices. On the other hand, stocks have historically provided the significant long-term returns and long-term protection against inflation.
Periodically, revisit your portfolio and rebalance, or make adjustments as necessary. Such periodic rebalancing of your portfolio will help to keep your asset allocation in-line with your goals.
As many people may have learned, trying to time the market is an impossible task, even for experts.

11. Bear Survival Continue investing regularly Maintain your allocation
Make shifts gradually if necessary
Tune out noise
Unfortunately, none of us have that crystal ball that will reveal what the economy, or the financial markets have in store for us. As a result, it is important to follow these simple rules for investing to make sure that you are protected in declining markets but positioned to share in any wealth generation that a bull market offers.
A Bull Market A prolonged period in which investment prices rise faster than their historical average. Bull markets happen as a result of an economic recovery, an economic boom, or rising investor confidence and expectations of further gain. Indicators of confidence are prices going up, market indices like the Dow Jones Industrial Average (DJIA), the Russell 2000® Index, and the Nasdaq-100 Index go up too. Number of shares traded is also high and even the number of companies entering the stock market show that the market is confident.
You may wish to consider maintaining your retirement savings contributions without interruption in order to take advantage of dollar cost averaging.
Dollar cost averaging is a technique designed to reduce market risk through the systematic purchase of securities at predetermined intervals and set amounts.
Finally, as I stated at the beginning of this seminar, we are bombarded everyday with volumes of facts, opinions, and statistics about the markets. More information can be a good thing, but it can also cause fear and confusion. It’s good to be an informed investor and hopefully, this last hour helped you to become more informed about the economic world around us. But always remember, you are investing to achieve a long-term goal. The real winners tune out the noise, stick with a long-term strategy, and attain their retirement goals.

12. AdviceSolutions www.TA-Retirement.com
Speaker Note: Utilize this slide and the following AdviceSolutions slide only if plan has AdviceSolutions. If plan does not permit, remove this slide along with slide 31.
From time to time you may want additional guidance on how you should be investing your assets. If so, you’ll want to take advantage of AdviceSolutions.
AdviceSolutions is a retirement planning module, solely provided for educational purposes. It is not investment advice. Neither Transamerica Retirement Services nor AdviceFrameworks act as fiduciary in providing the recommendation.

13. AdviceSolutions Interactive investment and retirement planning tool
AdviceSolutions provides you with:
– Customized financial forecasting
– Instant and personalized online assistance
Speaker Note: Utilize this slide if plan has AdviceSolutions. If plan does not permit, please remove this slide.
AdviceSolutions is an interactive, online tool that can be accessed on TA-Retirement.com. This tool empowers you to develop an effective investment strategy for achieving your retirement goals.
AdviceSolutions offers you:
Customized financial forecasting
Instant and personalized online assistance

14. Disclosures 14 Speaker Note: Read all the disclosures. 14
Transamerica Retirement Services and its representatives cannot give investment, ERISA, tax, or legal advice. This material is provided for informational purposes only based on our understanding of material provided and should not be construed as ERISA, tax, or legal advice. Clients and other interested parties must consult and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Although care has been taken in preparing this material and presenting it accurately, Transamerica Retirement Services disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it.
Transamerica Financial Life Insurance Company and Transamerica Life Insurance Company are affiliates of Diversified Investors Securities Corp.
Slide 19
Source: Morningstar, Inc. Data as of June 30, The Barclays Capital Aggregate Bond Index is comprised of securities from Barclays Capital Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. Standard & Poor’s S&P 500 stock market index is comprised of 500 leading companies in leading industries of the U.S. economy. Transamerica Retirement Services is not affiliated with Barclays Capital or Standard & Poor’s.
One cannot invest directly in an index. An index is unmanaged and does not take into account the fees and expenses associated with an actively managed fund, so performance may differ. Past performance is not a guarantee of future performance.
Slide 20
Source: Morningstar, Inc. The annual stock market returns shown are represented by the S&P 500 Index and are for the 10-year period from March March Standard & Poor’s S&P 500 stock market index is comprised of 500 leading companies in leading industries of the U.S. economy. Transamerica Retirement Services is not affiliated with Standard & Poor’s or Morningstar, Inc.
Source: Standard & Poor’s, Surviving a Bear Market, The long-term performance quoted for stocks is based on the 50-year average annual return of the S&P 500 Index from Transamerica Retirement Services is not affiliated with Standard & Poor’s.
Slide 21
Source: Morningstar, Inc. Data as of June 30, The indices used to represent each investment style are as follows: Value – Russell 1000® Value Index; Growth – Russell 1000® Growth Index; Large-cap – Russell 1000® Index; and Small-cap – Russell 2000® Index. Russell Investments’ Russell 1000® Value Index is comprised of the 500 most value-oriented stock companies in the Russell 1000® Index, Russell 1000® Growth Index is comprised of the 500 most growth-oriented stock companies in the Russell 1000® Index, Russell 1000® Index is comprised of the largest 1,000 stock companies in the Russell 3000® Index, and Russell 2000® Index is comprised of 2,000 small company stocks. Transamerica Retirement Services is not affiliated with Russell Investments.
Speaker Note: Read all the disclosures. 14 14

15. Disclosures 15 Speaker Note: Read all the disclosures. 15 Slide 22
Source: Morningstar, Inc. Data as of June 30, The indices used to represent each investment style are as follows: 3-Month Treasury – Citigroup 3-Month Treasury Bill Index; Short-term Government Bond – Merrill Lynch 1-3 Year Treasury Index; Intermediate Government Bond – Barclays Capital Intermediate Government Bond Index; Investment Grade Bond – Barclays Capital Aggregate Bond Index; and High Yield Bond – Credit Suisse First Boston Global High Yield Index. The Citigroup 3-Month U.S. Treasury Bill Index is comprised of U.S. Treasury bills with a remaining maturity of three months. The Merrill Lynch 1-3 Year Treasury Index is comprised of Treasury notes and bonds with maturities of 1-3 years. The Barclays Capital Intermediate Government Bond Index is comprised of all bonds covered by the Barclays Capital Government Bond Index with maturities between one and 9.99 years. The Credit Suisse First Boston Global High Yield Index is comprised of issues rated BB and below by S&P or Moody’s with par amounts greater than $75 million. Transamerica Retirement Services is not affiliated with Citigroup, Merrill Lynch, Barclays Capital, or Credit Suisse First Boston.
One cannot invest directly in an index. An index is unmanaged and does not take into account the fees and expenses associated with an actively managed fund, so performance may differ. Past performance is not a guarantee of future performance.
Speaker Note: Read all the disclosures. 15 15

16. RETIREMENT A JOURNEY MADE SIMPLE.® TRANSAMERICA. MASTER RETIREMENT®
POWER CHOICE FREEDOM
RETIREMENT
A JOURNEY MADE SIMPLE.®
Before I go, I’d be happy to answer any questions you still have.
If that concludes the questions, I’d like to thank you for taking the time to attend this seminar today.
Transamerica Retirement Services (“Transamerica”), a marketing unit of Transamerica Financial Life Insurance Company (“TFLIC”), 4 Manhattanville Road, Purchase, New York 10577, and Transamerica Life Insurance Company (“TLIC”), 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499, and other TFLIC and TLIC affiliates, specializes in the promotion of retirement plan products and services. TFLIC is not authorized and does not do business in the following jurisdictions: Guam, Puerto Rico, and the U.S. Virgin Islands. TLIC is not authorized in New York and does not do business in New York.
© 2009 Transamerica Corporation. All rights reserved.
TRS 3413ECON-0709
FOR EDUCATIONAL USE ONLY