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Global Investing

Global Investing.

umika
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Global Investing

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  1. Global Investing Securities offered through Lincoln Financial Advisors Corp., a broker/dealer,1300 S. Clinton Street, Fort Wayne, IN 46802-3506, Phone 800-454-6265.Insurance offered through Lincoln affiliates and other fine companies.Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. CRN200510-1003373

  2. Why invest globally? • Investment opportunities • Market history • Growth potential • Diversification benefits • Expand efficient range

  3. World stock market capitalization Year-end 2004 3% United States Japan Other Pacific United Kingdom 23% Other Europe Canada 50% 8% 4% 12% $33.0 trillion Capitalization calculated at year-end 2004. Estimates are not guaranteed.

  4. Averagereturn 10.8% 11.8% 11.3% 11.1% Global stock market returns Highest and lowest historical annual returns for each region 1970–2004 Pacific 120% 107.5% 100% Europe 79.8% International 80% 69.9% 60% United States 37.4% Annual ranges of returns 40% 20% 0% -20% -22.8% -23.2% -26.5% -40% -34.3% Each bar shows the range of annual total returns for each region over the period 1970–2004.

  5. U.S. stocks International stocks $42.18 11.3% $39.66 11.1% International bonds $30.73 10.3% U.S. government bonds $21.30 9.1% Global investing Year-end 1969–2004 Ending wealth Average return $100 U.S. inflation $10 $5.08 4.8% $1 $0 1969 1974 1979 1984 1989 1994 1999 2004 Hypothetical value of $1 invested at year-end 1969. All values in U.S. dollars. Assumes reinvestment of income and no transaction costs or taxes.

  6. Growth through global investing Annual returns of top-performing developed global stock markets 2004 Austria 72% Greece 46% Belgium 45% United States 11% Norway 55% 2003 Greece 69% Sweden 65% Germany 64% Spain 59% United States 29% 2002 United States -22% New Zealand 26% Austria 17% Australia -0.3% Italy -6% 2001 Ireland -3% New Zealand 9% Australia 2% Austria -5% United States -12% Returns expressed in U.S. dollars.

  7. International stocks Comparing U.S. and international stock performance Average returns over 10-year holding periods 25% U.S. stocks 20% 15% 10% 5% 0% 1980 1985 1990 1995 2000 2004 Based on data from 1971–2004. Calculated using rolling 10-year average returns.

  8. Global portfolio $50,811 11.9% Benefits of global diversification 1969–2004 Ending wealth Average return $100,000 European stocks $49,069 11.8% U.S. stocks Pacific stocks $42,179 11.3% $36,674 10.8% $10,000 $1,000 $100 1969 1974 1979 1984 1989 1994 1999 2004 Hypothetical value of $1,000 invested at year-end 1969. Global portfolio represents an equal investment (1/3) in eachasset class.

  9. Global portfolio 21% Int’lstocks 33% U.S. stocks 46% U.S. bonds Average return 10.5% Risk 10.0% Domestic versus global 1970–2004 Domestic portfolio 40% U.S. bonds 60%U.S. stocks Average return 10.5% Risk 11.2% Risk is measured by standard deviation. Risk and return are based on annual data over the period 1970–2004.

  10. Japanese stocks Global portfolios U.K. stocks Pacific stocks European stocks Canadian stocks International enhances domestic portfolios International regions 1970–2004 17% Domestic portfolios 16% 15% 14% Return 13% U.S. stocks 12% 11% 10% U.S. bonds 9% 5% 10% 15% 20% 25% 30% 35% 40% Risk Risk is measured by standard deviation. Risk and return are based on 1970–2004 data. Data in U.S. dollars.

  11. Global household names TechnologyMicrosoft (US) Samsung (Korea)Fujitsu (Japan) Nokia (Finland) LG Electronics (Korea) Financial servicesCitigroup (US)HSBC Holdings (UK)Allianz (Germany)ABN AMRO Holding (Netherlands) Healthcare Merck & Co (US) GlaxoSmithKline (UK) Novartis (Switzerland) Roche (Switzerland) Bayer Healthcare (Germany) AutomobilesDaimler Chrysler (Germany)Ford (US)Honda (Japan)Toyota (Japan)Volkswagen (Germany) TelecomsAT&T (US)Deutsche Telekom (Germany) British Telecom (UK)NTT (Japan) Consumer non-durablesProctor & Gamble (US)Nestle (Switzerland)L’Oreal (France)Colgate-Palmolive (US)Unilever (UK)

  12. The risks of international investing • Currency risk • Economic/political risk • Market liquidity risk • Differences in accounting standards • Costs of investing internationally

  13. The impact of currency fluctuation 2004 Return to local investors Return toU.S.investors Currencyimpact United States 10.9% 0.0% 10.9% Pacific region 14.4% 4.9% 19.3% Japan 10.9% 5.3% 16.2% European region 12.7% 8.7% 21.4% United Kingdom 11.5% 8.3% 19.8% International composite 13.1% 7.6% 20.7%

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