INVESTMENT

PLAN
June 20, 2004

Financial Institution ORION

Financial Institution
Jbeil, Fidar, Oubary Bldg. 4th floor
Tel/Fax: 09-633487, E-mail: i_m@ureach.com
www.orionfi.8m.com
 INVESTMENT
PLAN
June 20, 2004

By Iyad Mourtada
i_m@ureach.com

Industry Analysis
Investment Fundamental Analysis
Solutions
9
Securities Selection 22
1
17
4
26
16
Economy Analysis
Portfolio Analysis
Asset Allocation

Copyright © 2004, Orion F.I - All rights reserved.

 CONTENTS

Page
Investment Solutions ………………………………………………………… 1
Personal Profile …………………………………………………………… 2
Investment Profile …………………………………………………………… 2
Investor Account …………………………………………………………… 2
Summary (Asset Allocation and Security Selection) …………………… 3

Economy Analysis …………………………………………………………… 4

The Global Economy
Developed markets ……………………………………………………… 4
Emerged markets ………………………………………………………… 7

Industry Analysis ……………………………………………………………… 9

Technology & Telecommunications ……………………………………… 10
Healthcare …………………………………………………………………… 12
Consumer goods & services ……………………………………………… 13
Energy ………………………………………………………………………… 15
Finance & Insurance………………………………………………………… 15

Asset Allocation ……………………………………………………………… 16

Securities Selection ………………………………………………………… 17

Money Market Securities ………………………………………………… 17
Fixed-Income Securities …………………………………………………… 18
Equity Securities &Mutual Funds ………………………………………… 19
International Investment …………………………………………………… 21

Fundamental Analysis ……………………………………………………… 22

Portfolio Analysis……………………………………………………………… 27

Appendix:
A. Personal Risk Tolerance………………………………………………… 28
B. Asset Allocation between the Risk and the Risk-Free Asset ……… 31
C. Election 2004: Perspectives For Investors…………………………… 33

References
 Investment Solutions…

You work hard for your money.

Make your money work hard for you!

The Orion Financial Institution will work with you to select instruments
that will help meet your financial objectives. It will attempt to maximize your
returns for the risks you are willing to take by using diversification.
Diversification means spreading your investing dollars across asset classes
(stocks, bonds and cash equivalents) and within each class, rather than
putting all your money in one type of investment. While you can't eliminate
risk, you can control the type and level of risk you're exposed to through your
choice of investments. Doing so can spread risk over a variety of
investments and may provide more consistent and reliable outcomes.

Why do you have to Invest?

Because by choosing not to invest at all and
staying on the sidelines while inflation grows away at
your money, your money will lose part of its
purchasing power.

It is your investment decision …

You want a comfortable retirement investing plan
working toward your goals, making your money grow
in compound rate.
Based on your risk tolerance, your objectives and
constraints we found that the optimal portfolio for you
is moderate portfolio asset allocation in retirement:
60% stocks (35% U.S.,25% international), 32%
bonds, 8% cash, rebalanced annually

Our Services:
¾ Provide dividend reinvestment plan (Use the dividends paid on shares
owned to purchase additional shares) to rebalance your portfolio
annually.
¾ Provide annual report of your portfolio performance.
¾ Provide portfolio insurance to protect you from the unexpected risks.
¾ Help you to expand your investment by going on margin.

Step1 Step2 Step3 Step4

Define Design Execute Monitor
objectives and portfolio to investment and adjust
risk tolerance match objectives strategy portfolio

Investing Process

1
Personal Profile:

Full Name : Mr. John Smith

Nationality : Lebanese
Age : 58
Occupation : Construction – Real Estate
Marital Status: Married, second marriage
Children : Two from first marriage age 18 and 16,one from last
marriage age 10

Investment Profile:

Proposal Size: $ 10,000,000

Objective:
Here are your objective based on your answers in personal risk tolerance
questioner:

Investment Objective: Income and Growth

Expected Rate of Return: 10.7%
Risk Tolerance: Moderate

Constraints:

Time Horizon : 5 years – Intermediate term

Annual Income : $ 200,000 ($ 160,000 , € 40,000)
Liquidity : Up to 0.02 % ($ 20,000)
Unique needs :
- Not more than 5% investment in any one instrument.
- 5% exposure to all emerging markets.
- Up to 10% high risky assets.

Investment Policy: Passive

Investor Account:

We advice you to open individual margin account using BrownCo

(www.brownco.com), it has a lot of special features and its commissions
are very low.

2
 Economy Analysis
“It should be a very good year-the best for business
since the 2000 boom.”

Mark M Zandi, chief economist at Economy.com Inc.

The Global Economy:

Developed markets:

2004 MACROECONOMIC FORECASTS

Expected Growth Expected CPI Interest Rate* Exchange Rate
in Real GDP, Inflation Change (%) units per U.S. $
(%) (% ) 03/04 12/04

United States 4.7 2.3 4.50 5.1 --

Japan 3.2 -0.2 1.30 1.50 104.7

Euro Zone 1.8 1.8 4.35 4.65 1.24

United Kingdom 3.2 2.0 4.99 5.18 1.82

* 10-YEAR GOVERNMENT BOND YIELDS

(Source: Blue Chip Economic indicators)

The U.S Economy:

The U.S. economy has been hit hard in the past few years by a number of
unexpected developments, including the tragic terrorist attacks of September 11,
2001, the corporate governance and accounting scandals of 2002, and the geopolitical
tensions surrounding the war with Iraq in 2003, but the U.S. economy is much
stronger now than it was a year ago.

Business Cycle:
The economy now are slowly recovering from the rescission of seventh business
cycle in the U.S. economy since 1960 that happened three years ago, when the NBER
(National Bureau of Economic Research) announced in March 2001 that the business
cycle entered peak phase and then announced in November 2001 that it entered trough
phase.

4
Key Economic Indicators

Gross Domestic Product

The real GDP growth will

average 4.7% in 2004. In
2005 growth will likely slow
close to its underlying
potential between 3.5%-4%.
We can see that the GDP Q1
is 4.2.

Unemployment

Productivity and real output

in manufacturing have risen
dramatically, and faster than in
the economy as a whole.
Productivity improvements
have boosted real income in the
United States. However,
because Americans have spent
much of their real income gains
on services rather than
manufactured goods,
manufacturing’s share of
employment has declined. In the recent recession, manufacturing output and
employment were hit particularly hard. But now the unemployment rate
expected to decline and strong economy will lead create new jobs.

5
 Inflation

The U.S. economy is

facing a strong summer of
growth, and the chance
inflation pressures may
heat up a bit, according to
Conference Board
economist Ken Goldstein,
"The data reflect a robust
economic environment this
spring and point to more of
the same this summer.
There are concerns about
the high cost of gasoline,
milk and a possible rise in
short-term interest rates,
but almost one million new jobs opened up in the last three months". The
CPI expected yearly percent change by 1.9% in 2004.

Interest Rate

Interest Rates over the Short Term

The Federal Reserve is
expected by midyear to start
raising short-term interest rates to
nearly 2% from the current
historical low arte of 1%.

Interest Rates over the Long Term

The gradual increase in the interest rate on 91-day Treasury bills is
projected to continue through 2009. The rate is expected to reach 4.4 percent
by 2009, at which date the real interest rate on 91-day Treasury bills will be
close to its historical average. The projected path of the interest rate on 10-
year Treasury notes is consistent with that on short-term Treasury rates. By
2008, this yield is projected to be 5.8 percent, 3.3 percentage points above
expected CPI inflation—a typical real rate by historical standards.

6
 Japan:
Japan has grown faster than the
U.S. over past six months, the
stock market is up 45% over the
past 13 months, and the economy
is generating jobs again, pushing
unemployment to a three-year low
of 4.7%. Exports -always a strong
driver of Japan’s economy- are
soaring, particularly to china.
Japan still suffers from deflation, which took root in 1998. Consumer prices have
been dropping at about 1% annually, and land prices have fallen since 1992. Most
economists, though, think prices are hitting bottom and will start rising modestly
late next year.

Emerged markets:
Easter Europe:
There is slow growth in these countries, and high currency volatility, so is risky to
invest in them under these conditions.

Easter Europe, 2004

Expected Growth Expected CPI
Exchange Rate
in GDP, Inflation Country Risk
units per U.S. $
(%) (% )

HUNGARY 3.5 5.8 221.3 A2

POLAND 4 2.2 3.87 A4

CZECH
3.5 2.6 28.1 A2
REPUBLIC
SLOVAKIA 4.5 7.4 33.5 B

RUSSIA 5 11.7 28.9 B

TURKEY 4.0 16.0 1421 B

* Source: Acceleration

7
Latin America:

Latin America countries try to recover after three years of no growth, and the
preliminary indicators show that the U.S investors can invest in these countries to
protect themselves in the event of a slowdown in Chinese demand.

LATIN AMERICA, 2004

Expected Growth Expected CPI
Exchange Rate
in GDP, Inflation Country Risk
units per U.S. $
(%) (% )

ARGENTINA 4.6 7.0 3.05 D

MEXICO 3.5 3.6 11.0 A4

BRAZIL 3.3 6.2 3.40 B

CHILE 4.2 2.8 680 A2

VENEZUELA 5.9 28.2 2600 D

COLOMBIA 3.1 5.8 3110 B

* Source: Acceleration

Asia: Driven by China...

Now Asia rebound after the SARS epidemic last spring, through high exports to
U.S and Japan, and it is expected to enjoy high earning in near future, so it is a bright
spot for U.S investors.

ASIA, 2004
Expected Growth Expected CPI
Exchange Rate
in GDP, Inflation Country Risk
units per U.S. $
(%) (% )

THE
4.0 3.0 55.5 A4
PHILIPPINES

MALAYSIA 5.0 2.0 3.9 A2

HONG KONG 6.0 0.0 7.8 A1

SOUTH KOREA 5.1 3.5 1145 A2

THAILAND 6.0 2.0 41.4 A3

CHINA 8.7 2.6 8.11 A3

* Source: Acceleration

* All the figures are from “ National Economic Trend” 06 /16 /2004
Research Division - Federal Reserve Bank of St. Louis
Website: Http://research.stlouisfed.org/publications/net/.

8
 Industry Analysis
Leaders Laggards
Hardware Manufacturing
Chips Education
Construction Drugs
Telecom Aerospace

Percentage Percentage
Growth
Sector / Industry of the of Common Value
Prospects*
Sector Stocks
Technology 30% $ 1,080,000
B Software 25% 7.5% 270,000

B+ Hardware 35% 10.5% 378,000

A Chips 40% 12% 432,000

A- Telecommunications 20% 720,000

Healthcare 10% 360,000
C+ Healthcare Providers 50% 5% 180,000

C Pharmaceuticals 20% 2% 72,000

C+ Biotechnology 30% 3% 108,000

Consumer Goods & Services 25 900,000

B- Autos 20% 5% 180,000

C Retail Trade 15% 3.75% 135,000

C+ Transport 10% 2.5% 90,000

C+ Travel 10% 2.5% 90,000

B+ Media 15% 3.75% 135,000

B Advertising 20% 5% 180,000

C+ Food & Beverage 10% 2.25% 81,000

B Energy 8% 288,000
B+ Finance and Insurance 7% 252,000
Total $ 3,600,000

* BusinessWeek has assigned each industry a grade on expected growth and other factors.

9
 Technology &
Telecommunications
Software Industry:
Analysts now estimate that over the
next half-decade, as much as half the
software sold to corporations will be
paid for on a monthly basis, as part of a
long-term contract or monthly rental fee,
or even on a pay-per-use basis. The
software-as-service trend will help sales
to rise 6.7% in 2004, according to
Gartner.
Security spending is forecast to
increase 10.2% in 2004, so security
specialist Symantec Corp. is expected to
shine. Other high-growth segments
include design-and-engineering software
which will increase 11.7%, software for
integrating one application with another,
which will grow 10.1%, and storage
software , which will increase 6.2%,
according to Gartner.
The fastest-growing market of all-
though still very small-is software that
helps corporations manage big projects,
such as product development. Led by
companies such as Mercury Interactive
Corp., sales are expected to jump 15.4%
in 2004.
Hardware Industry:
Worldwide spending on hardware will
rise a sturdy 4.8% in 2004, according to
market researcher IDC. Increased
computer sales will make up 17% of
U.S. economic growth during the year,
and information-technology investments
overall, including software and services,
will generate 80% of the expected rise in
productivity from 2002 to 2010,
according to Economy.com.
Now, with technology prices at low
levels, 40% of small and midsize
companies plan to increase their
spending on computer infrastructure
during 2004, while large corporations
are lured into spending more in part by
the opportunity to try out emerging
technologies such as Wi-Fi networking
and Voice-over-Internet phone systems.
10
Shipments of portable PCs will jump
26% in 2004, while overall PC unit sales
will surge 11.4%, according to IDC. Big
companies are replacing their copiers
and printer with networked workhorses
that can handle both tasks, cut cost by as
mush as 30%, so the sales of PC
peripherals will rise 13.8%.
Chips Industry:
Global sales of chips will grow by
19.5% in 2004, according to the
Semiconductor Industry Assn. This
recovery will be across all chip markets:
computers, consumer electronics,
telecom -cell phones, in particular-
transportation, and industrial equipment.
Grandbois is forecasting 14% growth
for PC chips–the largest market
segment, at around 30% of total chip
consumption. That growth results from
the high speed of new PC chips and its
advance wireless communications
technology.
Steve L. Cullen, director of chip-
market research at In-Stat Inc., says that
the good times should roll not only in
2004 but also for few years out.
Telecommunication Industry:
U.S. telecom companies are expected
to increase capital expenditures by 5% in
2004, according to Lehman Brothers Inc
analyst Steven Levy. Telecom-
equipment revenue will grow 8%,
according to telecom economist James
Glen of Economy.com. The service
sector is expanding 4.7% to $398 billion.
Nearly all of that growth will come from
the $100 billion wireless-services sector,
which Glen expects to grow about 11%.
Faster networks, lower prices, and hot
new features such as gaming are driving
cellular growth. Telecom sector sales
will grow 50% in 2004, according to
Levy.
 The Wireless Frontier

ZigBee

Wi-Fi

WiMax

Mobile-Fi

Ultrawideband

Promising Stocks
EST. P-E S&P
COMPANY/SYMBOL INDUSTRY PRICE*
RATIO Ranking
Symantec SYMC Software $40.01 23.58 B-

Oracle ORCL Software 11.14 17.22 B

AutoDesk ADSK Software 39.40 23.08 NR

Dell DELL Computer & Peripherals 34.81 23.30 B+

Hewlett-Packard HPQ Computer & Peripherals 20.92 12.73 A-

Canon CAJ Computer & Peripherals 52.10 24.7 NR

Intel INTC Semiconductors 27.64 19.10 A

Advanced Micro
Semiconductors 14.88 20.41 C
Devices AMD
Nextel Communication
Telecommunications 25.69 11.74 C
NXTL
Qualcomm Qcom Telecommunications 66.49 30.02 B

France Telecom FTE Telecommunications 24.64 12 NR

Communication
CISCO CSCO 64.00 34 B+
Equipment
* June 16/2004

11
 Healthcare
Healthcare Provider Industry:
Medical cost will continue to rise, and
at a rate considerably faster than that of
overall inflation. But a shift toward
cheaper generic and over-the-counter
drugs, coupled with lower hospital use,
caused health-care inflation to slow in
2004.
Total national spending on health care
will increase by about 7% in 2004,
according to the Centers of Medicare &
Medicaid Services.
“Companies are paying twice as
much in health-care costs today as they
did six years ago”, says James K.
Foreman, a managing director of
Towers Perrion, and that will increase
insurance premiums and other health-
care costs by 12% in 2004.
Pharmaceutical Industry:
The industry has a broad stream of
new products expected to reach at least
$1 billion each in annual sales.
However, new drugs don’t always mean
new profits. Many of the new
compounds will take away sales of
existing drugs. Moreover, new drugs
typically lose money in their first year or
two while the cost of advertising blitzes
Many biotech and pharmaceutical stocks have already climbed in
2003. But health-care providers still offer attractive opportunities.
Promising Stocks
COMPANY/SYMBOL INDUSTRY
UnitedHealth Group UNH Healthcare Provider
Pfizer PEF Pharmaceutical
Amgen AMGN Biotechnology
* June 16/2004
12
Overwhelm initial sales. There isn’t
likely to be much relief on the pricing
front, either, given that governments and
insurance are rebelling against price
hikes as they struggle with double-digit
increase in healthcare costs. Finally
regulators are forcing drugmakers to
spend more to bring their manufacturing
plants up to snuff.
Biotechnology Industry:
“The industry fundamentals are
strong” says analyst David Wood of
investment bank Rodman & Renshaw.
New product approvals and promising
results experimental makes the industry
soared, “it’s been more than a recovery-
it’s been quite a resurgence.” Says Carl
B. Feldbaum, president of the
Biotechnology Industry Organization.
In general, through, analysts are hopeful.
“Drug development is risky, but the
biotech industry is starting to mature”,
says Dennis J.Purcell of the Perseues-
Soros Biopharmaceutical Fund: “We are
seeing better-run trials, and companies
are better financed because they raised
capital this year.”, but Dr.Jean-Francois
Formela, a general partner at Atlas
Venture says that “there is no doubt we
will see spectacular failures.”
EST. P-E S&P
PRICE*
RATIO Ranking
$64.00 14.47 A
35.43 14.84 A+
53.48 18.84 B
 Consumer
Goods & Services
Auto Industry:
While the U.S. economy is revving up,
domestic carmakers are finding it hard to
escape from incentives. That means
financial gimmicks will probably
continue to sap profits in 2004. Most
executives and analysts are projecting
sales to be u 3% from 2003.
Domestic carmakers are saddled with
more factories than they need and union
contracts limit their ability to shutter
excess capacity, so assembly lines
continue to crank out slow sellers.
Iceology Inc., a Los Angeles auto
forecaster, predicts that U.S. auto
makers will lose an additional three
points of cars shares in 2004, dropping
below 42%.
The real competition in the automobile
market will be in the emerged market,
like China and Russia.
Retail Industry:
Standard & Poor’s predicts that sales
of general merchandise, apparel,
furniture, and other goods
excluding cars and food- will rise by
5.9% this year.
Merrill Lynch expects that sales by
mass discounters will grow by 3.6% in
2004, wholesales clubs will grow by
5.3%, and luxury sales will lead the
retail growth race, with a 6.1% surge.
Forrester Research Inc. forecasts that e-
commerce sales will rise by 28% in
2004.
The increase of tax refunds and cut in
capital-gains and dividend taxes will put
more cash in consumers’ pockets, so
they will spend more in the first half of
the year, that will increase CPI(Inflation)
and will lead to higher prices.
Transportation Industry:
According to Global Insight Inc.,
industry sales for the year should rise
1.7%, the consultant expects operating
income for the sector to surge more
dramatically, by 40% in 2004.
The price of move goods in 2004 will
jump by 3% to 4%, according to some
industry analysts.
Travel Industry:
Better times for airlines, hotels, and
car rental companies are ahead, after
terrorism fears, recession, war, and
SARS epidemic, industry wide capacity
is expected to grow nearly 7%.
Regional affiliates of the network
airlines and low-cost carriers like
Southwest Airlines Co. and Jet-Blue
Airways Crop. are poised to grow the
fastest.
Hotel-industry revenues should climb
6% this year, and profits will jump 16%,
according to PricewaterhouseCoopers’
Bjorn Hanson.
-
Advertising Industry:
Spending on advertisements should
grow by 6.9% this year, It will be fueled
by big events such as Olympics and the
elections, along with major pushes for
health and beauty products, drugs, and
cars. Networks TV ads should surge by
12% boost, cable also can expect 12%
boost, and Internet advertising will grow
21%, yet older media – radio, magazines
and newspapers will see just single-digit
gains.
13
 Media Industry: Food & Beverage Industry:

The economy improvement makes More cattle are expected to be marketed in

the big media to get bigger. Total
spending, on every thing from
movie tickets to billboards is
expected to grow 6.5% this year. It
looks like the advertising recession
should come to an end at last.
late spring, cattle prices should retreat, leading
to better margins in the near to mid-term. We
believe protein margins will be strong also due
to ongoing strong demand for beef, pork and
poultry, driven by the low-carbohydrate diet
trend, which has been keeping protein prices at
relatively high levels..

Promising Stocks
EST. P-E S&P
COMPANY/SYMBOL INDUSTRY PRICE*
RATIO Ranking

Toyota Motor TM Automobile $80.56 11.17 NR

General Motors GM Automobile 47.98 6.55 B

Wal-Mart Stores WMT Retail Trade 55.62 20.46 A+

eBay EBAY Internet Companies 86.50 54.68 NR

Tiffany & Co. TIF Retail 37.73 20.12 A

United Parcel Services
UPS
Transportation 73.42 22.48 NR

Southwest Airlines LUV Airlines 15.88 23.60 A

America West Airlines
Airlines 9.43 7.60 NR
AWA
I-Cable Communications
Broadcasting 7.62 5.1 A
ICAB
Yahoo! YHOO Internet Companies 32.20 72.29 NR

Smithfield Foods SFD Food & Beverage 29.10 11.41 B

* June 16/2004

14
 Energy

Energy Industry:

The worldwide exploration and

production (E&P) spending will
grow only 9%, according to
Lehman brothers Inc. That’s is
relatively weak response to a 2004
surge that sent oil prices up 30%
over the 2000-3 average.
The increase of the oil prices will
lead to rise the natural-gas
production which is still fall about
16% short of demand, according to
U.S Energy Dept.

Finance & Insurance

Energy:

Financial Industry: Insurance Industry:

The surging stock market and booming Health insurance premiums to

economy helped generate record profits
across the financial-services sector. U.S
Bancorp Piper Jaffray analyst Andrew
B. Collins predicts that profits will rise
to $60.5 billion-a respectable 10%
uptick over 2003’s performance.
individuals will grow at a double-digit
rate as employers shift more cost to
employees, and property-casualty
insurance premiums should rise less
quickly, by 8.1%, according to the
Insurance Information Institution.

Promising Stocks
EST. E-P S&P
COMPANY/SYMBOL INDUSTRY PRICE*
RATIO Ranking
The Shell Transport and
Oil Services $41.50 14.26 NR
Trading Company SC

Exxon Mobil Corp XOM Oil and Gas 44.88 14.8 A-

Devon Energy DVN Oil and Gas 53.86 15.16 B

American International
Insurance 71.74 13.88 A+
Group AIG

Providian PVN Finance 14.84 11.98 NR

* June 16/2004

15
 Investment Portfolio with Desired Asset Allocation
of Mr. Smith

Percentage
Investment instrument Current of Current Annual
Value Portfolio yield income

Fixed-dollar instrument: $4,000,000 40% 5% $200,000

Money Market Securities 800,000 8% 1.66% 13,300

Fixed-Income Securities 3,200,000 32% 5.83% 186,700

Variable-dollar instrument: 6,000,000 60% 14.5% 870,000

Equity Securities 4,500,000 45%

Mutual Funds 1,500,000 15%

Totals $10,000,000 100.0% 10.7% $1,070,00

Asset Allocation of Mr. Smith Portfolio

8%
15%

Money Market Securities

Fixed-Income Securities
32%
Equity Securities

Mutual Funds

45%

Based on the your risk tolerance we found that this is the best suitable asset
allocation for your portfolio because it is follow your objectives and constraints.
The primary reasons to hold bonds in a portfolio are to reduce equity risk and
provide you with annual income.

16
 Money Market Securities

Percentage Percentage
Investment Current Annual
Current of Money of
instrument yield* income
Value Market Portfolio

Treasury bills
$ 100,000 12.5% 1% 1.10% $ 1.100
1-month

U.S Commercial
200,000 25% 2% 1.45% 2,900
Paper, 3-month

Certificates of
500,000 62.5% 5% 1.86% 9,300
Deposit, 6-month

Totals $ 800,000 100.0% 8% 1.66% $ 13,300

* Release Date: June 15, 2004

** Source: Federal Reserve (http://www.federalreserve.gov/Releases/)

Money Market Securities

13%

Treasury Bills

U.S Commercial Paper

25%

Certificates of Deposit
62%

™ The first step in a successful investment strategy is to make sure you are prepared
for financial emergencies by setting aside money you can use for the unexpected.
Your emergency account should be large enough (more than 20,000) so you don’t
need to sell some of your investments — possibly during unfavorable market
conditions — to pay for unplanned expenses.

™ The inflation will not affect this type of investment. The Nominal rate ought to
increase when there is increase in the expected inflation rate, so if the Federal
Reserve raises the interest rate you will receive equal purchasing power for your
money.

17
 Fixed-Income Securities

Percentage Percentage
Investment Current of Fixed- Of Current Annual
instrument Value Income Portfolio yield income
Market

U.S. Bonds $256,000 8% 2.56% 4.10% $10,496

Corporate Bonds 2,304,000 72% 23.04% 6.10% 140,436

Foreign Bonds 640,000 20% 6.4% 5.57% 35,648

Totals
Totals $3,200,000 100.00% 32% 5.83% $186,700

* Release Date: June 16, 2004

Fixed-Income Securities

8%
20%

U.S. Bonds

Corporate Bonds

Foreign Bonds

72%

U.S. Bonds:
The interest rate is expected to increase in next 5 years because of that we
will use horizon-matching strategy to protect the price of bonds against this
interest rate risk by investing in 5-year Bonds.

Corporate Bonds:
We will invest in grade securities that give us suitable Interest to cover
your annual Income, and that will be done by using laddering approach
(purchasing bond with different maturity dates) or duration. to protect you
against rise in interest rate.

Foreign Bonds:
All foreign bonds will be in Australian Government Bonds, so the Interest
of the foreign bonds can cover your daughter allowances in France
(€ 40,000) after we transfer it to Euro, and at the same time we will hedge
the exchange rate risk of these Foreign Bonds after 5 years.

18
 Equity Securities & Mutual Funds

Percentage Percentage
Investment Current Value
of Equity and MFs of portfolio
instrument

Equity Securities 4,500,000 75% 45%

U.S. Stock 3,000,000 50% 30%

Foreign Stock 1,500,000 25% 15%

Mutual Funds 1,500,000 25% 15%

U.S.
500,000 8% 5%
Mutual Funds

Foreign
1,000,000 17% 10%
Mutual Funds

Totals 6,000,000 100.0% 60 %

Equity Securities & Mutual Funds

8% 17%

U.S. Stock

Foreign Stock
25%
U.S. Mutual Funds

Foreign Mutual Funds

50%

U.S. Foreign

58% 42%

19
 Equity Securities

Percentage Percentage
Investment Current Value of Equity of
instrument Securities portfolio

U.S. Stock $ 3,000,000 67% 30%

Foreign Stock 600,000 13% 6%

iShares S&P
Europe 350 360,000 8% 3.6%
(IEV)

iShares MSCI-
315,000 7% 3.15%
Japan (EWJ)

iShares MSCI-
225,000 5% 2.25%
U.K. (EWU)

Totals $ 4,500,000 100.0% 45%

Mutual Funds

Percentage Percentage
Investment Current Average
of Mutual of
instrument Value Annual Total
Funds portfolio
returns

Merrill Lynch US
Small Cap Fund, $ 525,000 35% 5.25% 27.02%
(MASKX)

Merrill Lynch
Small Cap Fund, 375,000 25% 3.75% 23.41%
(MASPX)

Vanguard
375,000
Emerging Market 25% 3.75% 27.52%
11.18
Fund (VEMIX)

Fidelity China
Region Fund 225,000 15% 2.25% 21.36%
(FHKCX)

Totals $ 1,500,000 100.0% 15% 25.7%

* Release Date: June 16, 2004

20
 International Investment
The U.S. stocks represent only 35% percent of the value of
all stocks, so the global diversification offers investors an
opportunity to raise returns and at the same time reduce risk,
however foreign investing brings some risks of its own, most
notably exchange rate risk, which is the danger that exchange
rate shifts will decrease the number of dollars a foreign
currency will buy.

- The international diversification will be into both developed and emerging markets.
- Return from foreign markets is function of two factors:
- Return in the foreign market
- Return on the foreign exchange

Foreign Bonds:
Australian Government Bonds (5 years)

Equity Securities

WEBS: (Instrument that track Foreign Markets)

WEBS (world Equity Benchmark Shares) are equity securities, passively managed,
offer U.S. investors portfolio exposure to country-specific equity markets, and their
management and administrative fees are relatively lower than current open-end or
close-end country funds.

WEB Ticker Symbol

Japan MSCI-Japan (EWJ)

U.K. MSCI-U.K. (EWU)
Europe S&P Europe 350 (IEV)

Common Stock:

COMPANY/SYMBOL Country

Canon Japan
France Telecom FTE France
Toyota Motor TM Japan
Shell Transport and Trading U.K

Mutual Funds:

Fund Name
Merrill Lynch US Small Cap Fund, (MASKX)
Merrill Lynch Small Cap Fund, (MASPX)
Vanguard Emerging Market Fund (VEMIX)
Fidelity China Region Fund(FHKCX)

21
 Fundamental Analysis

Return
EST. Net
on
Industry/Company P-E
equity
profit Bate
RATIO margin
(1 year)

Software
Symantec SYMC
Leader in consumer antivirus programs, the
unflagging creativity of hackers and virus writers 23.58 21.01% 21.01% 1.55
helped this security-software specialist grow at a
torrid pace.

Oracle ORCL
Keeps racking up the profits, thanks to its installed
base of database customers. Can a takeover bid for 17.22 42.42% 32.18% 1.82
PeopleSoft reignite sales growth

AutoDesk ADSK
It will have a healthy market for its computer-aided- 23.08 27.77% 14.27% 1.03
design software, as long as engineers and architects
are using computers.
Hardware
Dell DELL
Taking market share in PCs and moving into other 23.30 54.73% 6.33% 1.64
consumer electronics.

Hewlett-Packard HPQ
Will benibt from companies plan to increase their 12.73 8.07% 4.59% 1.70
spending on computer infrastructure during 2004.

Canon CAJ
Sales of digital cameras are helping fuel record profit 24.7 17.79% 8.62% .94
growth. Now it’s developing new flat-screen
technology with Toshiba.
Chips
Intel INTC

Heavy investment in new plants helped it capitalize 19.10 18.24% 21.38% 2.06
on the tech industry’s rebound and expand chips
sales beyond its PC industry stronghold, it plans to
have embedded WiMax chips in laptops by 2006.
Advanced Micro Devices AMD
Grabbed the spotlight with chips that process data at 20.41 -3.52% 3.65% 2.93
two different rates. Now, AMD is pushing to move
beyond the desktop and into servers.

22
Telecommunications
Nextel Communication NXTL
11.74 61.24% 19.05% 2.10
Leader in providing of fully integrated wireless
communications services
Qualcomm Qcom
It can’t keep up with demand for its wireless chips, 30.02 18.86% 34.71% 1.85
which allow cell phones to take pictures and stream
video.
France Telecom FTE
French phone giant has cut expenses and debt while
12 6.95% n/a 2.09
growing rapidly in wireless and internet usage.
CISCO CSCO

The networking giant is posting huge profits 27.14 13.28% 18.74% 2.20
while dominating the corporate market. Now
it’s wooing telecom companies.

Healthcare Providers
UnitedHealth Group UNH
A managed care provider aggressively pushing
14.47 44.46% 6.82% .30
Medicare business.
Pharmaceuticals
Pfizer PFE
Developing new drugs that will hit the market in
next year
14.84 6.34% 18.67% .42

Biotechnology
Amgen AMGN
18.84 13.28% 29.46% .54

Autos
Toyota Motor TM

World’s No.2 auto maker is selling more cars in

11.17 n/a n/a 1.02
china.
General Motors GM
6.55 41.21% 2.68% 1.13
Blanking the market with a wide array of news cars
in arrange of prices.
Retail Trade
Wal-Mart Stores WMT
20.46 23.28% 3.34% .80
will benefit from the increase of retail sales, and the
food section in WMT will surge in this year.
eBay EBAY

Driven by a 121% jump in international sales, eBay is 54.68 13.70% 26.46% 1.58
outpacing Internet rivals. Now it must live up to its $
58 billion market cap.
Tiffany & Co. TIF
High-end jeweler is well positioned for continuing
20.12 17.78% 8.82% 2.20
surge in luxury spending
Transport
United Parcel Services UPS
teaming up with a company called AuctionDrop to
22.48 23.77% 8.51% .47
23
enable those slackers who don't use the online
auction bellwether to easily pitch their old stuff to its
95 million users
Travel
Southwest Airlines LUV

Fly planes more hours per day and filling them up, to 23.60 9.96% 1.75% .83
improve earning and lower the cost, they hedged
against the increase of oil prices.
America West Airlines AWA 640.27
7.60 0.20% 2.82
%
Media
I-Cable Communications ICAB 14.61% 10.29% 1.38
Advertising
Yahoo! YHOO

Leaving the tech doldrums in cloud of dust, the Web

portal’s profit jumped an eye-popping 456% in 2003.
72.29 12.38% 13.36% 3.20
Now it must stave off Google.

Food & Beverage

Smithfield Foods SFD

Will benift from strong demand for beef, pork and 11.41 18.67% 4.97% .82
poultry, driven by the low-carbohydrate
diet trend
Energy
The Shell Transport and Trading Company
SC
now striking a more conciliatory tone as it
grapples with the fallout from a scandal 14.26 21.16% 6.29% .75
surrounding its overstatement of proven oil
and natural gas reserves
Exxon Mobil Corp XOM

Plans to begin production at several major oil 13 25.71% 9.12% .35

projects in West Africa, natural gas projects in
Norway and Britain, and a liquefied natural gas
project in Qatar.
Devon Energy Corp New DVN
12.8 34.80% 21.98%

Finance
Providian PVN 11.98 13.74% 15.77% 1.73
Insurance
252,0
American International Group AIG 13.88 16.02% 11.20% .88nnce
00

24
 % Proportion of
No. of Current Current Common
Security of Stock
Shares Price Value
Industry Portfolio

Technology $1,080,000 30%

Software
SYMC 2294 $40.01 91,800 34% 2.55%
ORCL 11149 11.14 178,200 66% 4.95%
Mercury Interactive 2741 39.4 54,000 20% 1.50%
Hardware
DELL 3257 34.81 113,400 30% 3.150%
HPQ 5420 20.92 113,400 30% 3.150%
Samsung 2902 52.1 151,200 40% 4.200%
Chips
INTC 7815 27.64 216,000 50% 0.06
AMD 14516 14.88 216,000 50% 0.06

Telecommunications 720,000 20%

NXTL 5605 25.69 144,000 20% 4.00%
Qcom 2707 66.49 180,000 25% 5.00%
FTE 10227 24.64 252,000 35% 7.00%
CSCO 2250 64 144,000 20% 4.00%

Healthcare 360,000 10%

Healthcare Providers
UNH 2812 64 180,000 5.00%
Pharmaceuticals
PEF 2032 35.43 72,000 2.00%
Biotechnology
AMGN 2019 53.48 108,000 3.00%

Consumer Goods & Services 900,000 25%

Autos
TM 1564 80.56 126,000 70% 3.500%
GM 1125 47.98 54,000 30% 1.5000%
Retail Trade
WMT 728 55.62 40,500 30% 1.12500%
EBAY 780 86.5 67,500 50% 1.87500%

25
 TIF 715 37.73 27,000 20% 0.7500%
Transport
UPS 1226 73.42 90,000 100% 2.50%
Travel
LUV 3400 15.88 54,000 60% 1.500%
AWA 3817 9.43 36,000 40% 1.00%
Media
ICAB 17716 7.62 135,000 3.75%
Advertising
YHOO 5590 32.2 180,000 5%
Food & Beverage
SFD 2783 29.1 81,000 2.25%

Energy 288,000 8%
XOM 120,960 42% 3.360%
2662 45.44
SC 95,040 33% 2.640%
2117 44.88
DVN 72,000 25% 2.000%
1584 45.44

Finance and Insurance 252,000 7%

Finance
PVN 10188 14.84 100,800 40% 2.800%
Insurance
AIG 1405 71.74 151,200 60% 4.200%

Bonds Price Yield YTM Maturity Rating No. of Bonds

U.S.
Government $1001.9 4.107% 4.1% 06/01/2009 - 255
Bonds (5 years)
Australian
(A$)
Government 7.500% 5.56% 09/15/2009 - 859
1086.8
Bonds (5 years)
INTELSAT 957.5 5.250% 6.382% 11/01/2008 BBB 5620
LTD Bonds
Citizens
Communications 1047.5 7.625% 6.301% 07/15/2008 BBB 4414
co. Bonds
AT&T corp.
1002.1 6% 5.946% 03/15/2009 BBB 6227
Bonds
Ford Motor co.
1076.8 7.375% 5.686% 10/28/2009 A 4095
Bonds

26
 Portfolio Analysis

Portfolio Diversification (Sectors)

30%

7%
Technology
Consumer Goods & Services
8%
Telecommunications
Healthcare
10% 25% Energy
Finance & Insurance
20%

International Portfolio Diversification

4% 4%
2%2% 6%
4% Australia
6% Europe
3% Japan
U.K.
U.S
France
China
Emerged
Global
69%

27
 Appendix PERSONAL RISK TOLERANCE
A Determining Your Personal Risk Tolerance

One of the first steps in developing an investment plan is to identify your profile
as an investor. It can depend on the goals you are investing toward, as well as
your personality in making investment decisions.

Personal profile:

Full Name: Mr. John Smith

Nationality: Lebanese
Age: 58
Occupation: Construction – Real Estate
Marital Status: Married, second marriage
Children: Two from first marriage age 18 and 16,
one from last marriage age 10

Investment profile:

Time Horizon: 5 years – Intermediate term

Proposal Size: $ 10,000,000
Annual Income: $ 200,000 - 40
Investment Policy: Passive
Investment Objective: Income and Growth

This questionnaire will help you estimate your personal tolerance for investment
risk, then translate this risk tolerance measure into a suggested investment
allocation for you at your current stage of life.

1. Indicate the five items you consider most important. Using 5 as most important and 1
as least important . (Place a 5 after the most important, then 4 after the next most
important, then 3,2,1.)

a. 1 liquidity (availability) up to 0.02 %

b. 2 current income from investments $ 200,000
c. 3 future income $ 15,000
d. 4 inflation protection (assuring purchasing power)
e. income tax deferral/relief
f. 5 capital growth
g. safety of principal

2. Do you think about Education Plan for your children Yes_____ No_#__

3. Your Financial Plan:

Investment Plan Saving Plan

Education Plan Retirement Plan

28
4. The degree to which the value of an investment moves up and down is called volatility
(risk). More volatile investments generally offer greater growth potential in the long term
than less volatile investments, but they may produce greater losses. With how much
volatility are you comfortable?

a. As little as possible. I want to focus on current income and stability of value even
if it means that my total returns are relatively small.

b. Some. I am willing to accept the occasional losses in value as long as my

investments have some potential for growth over time.

c. Moderate. I am willing to take moderate risk as long as my investments have a

greater potential for growth over time.

d. A considerable amount. I am willing to take substantial risk in pursuit of

significantly higher total returns.

5. If you could
choose only one of
the five portfolios
characterized below,
which would you
select?

a. Portfolio A

b. Portfolio B

c. Portfolio C

d. Portfolio D

e. Portfolio E

6. If you could increase your chances of improving your returns by taking more risk,
you would be:

a. Willing to take a lot more risk with your money

b. Willing to take some risk with some of your money (Up to 10 %)

c. Unwilling to take risk

7. Would you borrow money or go on margin trading to make an investment that might
double your money?

Yes__#__ No_____

29
Investment Types by Category

Aggressive Stocks Conservative Stocks Fixed Income

Aggressive Growth Funds Capital Appreciation Funds High Yield Bond
Small Cap Funds Growth & Income Funds Funds
Emerging Growth Funds Conservative Growth Funds 1-10 Year Investment
Managed Sector Funds Equity Income Funds Grade
International Stock Funds S&P 500 Index Funds Bond Funds
Global Stock Funds Global Bond Funds
Social Investing Funds Emerging Country
Emerging Market Funds Cash Debt Funds
Specific Country Funds Money Market Funds Long-Term CDs
Liquid Savings Accounts Guaranteed
Hybrids Short-Term CDs (Rotating Investment Contracts
Balanced Funds for Liquidity) Fixed Accounts
Asset Allocation Funds

30
 Appendix Asset Allocation between the Risk and the Risk-Free Asset
B
Risk Tolerance and Asset Allocation:

- Based on the risk tolerance questioner we found that you are moderate
investor, so the risk-aversion parameter for your portfolio will be A=3.
- We consider the money market and Fixed-income securities as free-risk asset
because we invested in developed countries bonds and corporation bonds rated
as investment grade securities.
- The average annual return on free-risk asset is 5%.
- The expected rate of return of risky asset in your portfolio is 14.5% (it beats the
S&P expectation of 8%-10% return in 2004), and the risk (standard deviation)
is 23% (diversified portfolio risk could be reduce to only 19.2%).

y* = ( 14.5 – 5 ) / (0.1 × 3 × (23)2) = 59.86% ≈ 60%

E(rP) = 40% × 5% + 60% × 14.5% = 10.70%

σP = 60% × 27% = 13.80%

UP = 10.7 – 0.005 × 3 × (13.8)2 = 7.84% (higher than free-risk return)

* y = ( E(r) – rf ) / 0.1Aσ2

31
 Asset Allocation between the Risk and the Risk-Free Asset

60%
Risk-Free Asset
40%
Risky Asset

The trade-off of risk and return (1970-2003)

50%
41.7%
40% 36.1%
29.7%
30%
25.5%
21.8% Best year
20%

10%
11.6% 11.3% 10.7% 10.0% 8.9% Average

0%
-1.3% Worst year
-10% -6.6%

-20% -13.1%
-19.4%
-24.1%
-30%

-40%
Aggressive Moderately Moderate Moderately Conservative
Aggressive Conservative

*Source: Schwab Center for Investment Research with data provided by Ibbotson Associates,Inc.

Portfolio Expected Return: 10.7%

Portfolio Risk: 13.8%

32
 Appendix Election 2004: Perspectives For Investors
C

How has the stock market typically behave in election years?

The year of the election has historically been a pretty good year for, the stock
market. On average, it's been up about 9% over the last hundred years, during
that first year of the election.
The second year, meaning the first term, or next year for us now, is only up
about 5%, So typically, it dose better in the year of the election, than the year
after the election. The second year after the election is less interesting as well. It's
little below average. However, the best year of the four is the one before the
election year.

Dose it make any difference if Republicans or the Democrats take the White
House?
it really doesn’t matter as much whether a Republican or Democrat on average
is elected. But one interesting thing that comes out of numbers is that if you look
at the stock market performance during the election year, when the incumbent is
republican, if the market is up, typically, when the Republican incumbent has
won, the market has been up a great deal, on average, 23%, and when the
Republican incumbent has lost, on average, that market has been down modestly.

Playing a Kerry Victory

Investors will need to move fast if the Democratic challenger looks likely to win. Here
is an action plan based on how various industries will be affected

Fannie Mae/Freddie Mac Buy

Democrats have always had a soft spot for these housing
mortgage giants; the Bush Administration wants to clip
their wings.
Homebuilders Buy
Kerry wants to boost home ownership with federal aid.
Life insurers Buy
Unlike Bush, Kerry has no plans for expanding tax-free
savings that could gut their annuity business.
Big Pharma Sell
Kerry will approve drug reimportation and tougher
reimbursement limits on new Medicare drug benefit. But Based on the last survey
generic makers could be a buy. that had been taken in the
Defense Sell U.S., we can see that
bush has greater chance
Kerry is a longtime skeptic of big-ticket procurement
projects such as missile-defense systems. to win, so we built your
portfolio based on that
Oil and coal Sell assumption.
Drillers and miners can expect fewer tax breaks.

33