The Streetscape User Guide Planning Tools. Accessing Features on the Planning Tools Menu

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1 Overview The Streetscape User Guide The option on the Accounts menu contains tools to help you evaluate the following investment scenarios for your customer: Accumulated Interest Asset Allocation Bond Income College Planning Investment Planning Retirement Planning The planning tools listed above are identical to those available to your customer through MyStreetscape, which makes it easy for you to lend assistance when a customer is using a tool. Note: When referenced in a Planning Tool, the terms you or your refer to your customer. Accessing Features on the Menu To access features the menu 1. From the Brokerage Center main menu, select Accounts. 2. From the Accounts menu, select the. 3. Select an option from the left navigation menu, using the guidelines in the table below. IF YOU WANT TO estimate how much interest has accumulated between your most recent payment, and the sale of a bond or other fixed income security match an asset allocation model with an investment goal determine whether you are buying or selling bonds at a discount, premium, or par estimate how much money you will need to save to pay for a college education (in both present and future dollars) estimate the growth of an investment under certain variable conditions determine a savings strategy for personal retirement THEN select Accumulated Interest. select Asset Allocation. select Bond Income. select College Planning. select Investment Growth. refer to the topic Retirement Planner in this section. In This Section The Accumulated Interest Calculator... 3 How Accumulated Interest is Calculated... 3 Using the Accumulated Interest Calculator... 3 Clearing, custody or other brokerage services may be provided by National Financial Services LLC, or March 2001 Fidelity Brokerage Services LLC, Members NYSE, SIPC 1 of 22

2 Description of Results...4 The Asset Allocation Planner...5 Investment Profile Questionnaire (IPQ)...5 Using the Asset Allocation Planner...5 Description of Results...7 The Bond Income Calculator...8 Using the Bond Income Calculator...8 Description of Results...9 College Planning Calculator...11 Accounting for Inflation Rate and Pre Tax Rate of Return...11 Using the College Planning Calculator...11 Description of Results...12 Customizing your Target Savings...13 The Investment Growth Calculator...15 Investment Assumptions...15 Using the Investment Growth Calculator...15 Description of Results...16 Retirement Planner...17 Accessing Retirement...17 Using the Retirement Planning Calculator...17 Description of Retirement Planning Calculator Results...20 Using the Spend Or Save Calculator...21 Description of Results of 22 March 2001

3 The Accumulated Interest Calculator Use the Accumulated Interest calculator to estimate the interest that has accumulated between your most recent payment, and the sale of a bond or other fixed income security. How Accumulated Interest is Calculated At the time of sale, the buyer pays the seller the bond s price plus accrued interest, which is calculated by multiplying the coupon rate by the number of days that have elapsed since the last payment. Note: The number of days elapsed is dependent on the type of fixed income security being sold. The Accumulated Interest calculator does not handle odd first or last periods, nor take into account financial holidays. Using the Accumulated Interest Calculator To calculate accumulated interest Select the applicable Bond Type: Corporate/Municipal, or Treasury Enter the Annual Coupon Rate percentage (which refers to the security s interest rate) as a whole number. Enter the bond s Face Value. Note: Most bonds have a face value of $1,000. To find the accrued interest on a group of identical bonds, multiply the number of bonds by the face value of each bond. (Example: For six bonds with $1,000 face value, enter $6,000). For the Last Payment Date, enter the date (mm/dd/yyyy) of the last bond s last coupon payment Enter the Settlement Date. Note: The trade will settle in three days from the purchase date for corporate and municipal bonds, and one day from the purchase date for treasury bonds. March of 22

4 Select the applicable Payment Frequency, as described in the table below. IF THE COUPON IS PAID once per year every six months every three months SELECT PAYMENT FREQUENCY Annual. Semi-Annual. Quarterly. Click the Calculate button at the bottom of the screen. Description of Results The table below describes the results returned from the Accumulated Interest calculator. FIELD Accrued Interest Daily Interest Day Count Basis DESCRIPTION The total interest accrued on the transaction, rounded to the nearest penny. The amount of interest that accrues daily on the bond. The number of days on which interest is calculated: for corporate/municipal bonds, 30 day month/ 360-day year for treasury bonds, the actual number of calendar days between payments. Next Payment Date Number of Days Number of Days in Coupon Period The date the next coupon payment is to be made. The number of day worth of accrued interest. The number of days in the coupon period in which settlement occurs. Note: This number depends on the Day Count Basis for the bond. To print results Click the Print button on your browser s toolbar. To calculate accumulated interest on another bond 1. Click the New Calculation button Repeat the procedure above. 4 of 22 March 2001

5 The Asset Allocation Planner The Streetscape User Guide Use the Asset Allocation Planner to match an asset allocation model with a user s investment goals (e.g., aggressive or conservative). Investment Profile Questionnaire (IPQ) An investment profile questionnaire (IPQ) is used to create an investor profile by assessing the following variables: financial situation time horizon tolerance for risk, and investment goal. Based on the answers to multiple choice questions in the IPQ, the worksheet suggests one of four asset mixes that may be appropriate for that investor profile. The asset mixes are intended to achieve adequate risk-adjusted returns over an identified time horizon, and do not seek to maximize return. The calculations are merely suggestions and the final decision on an asset allocation model is the account owner s, based on individual situation, needs, goals, and aversion to risk, which may include factors beyond the scope of the worksheet questions. If any of these factors should change, the user should review the investment strategy. At a minimum, it is recommended that investors review their asset allocations on a yearly basis. Using the Asset Allocation Planner Use the information in the table below to determine the appropriate action to take. March of 22

6 IF YOU WANT TO VIEW an asset mix for investors with a time horizon of two years or less a suggested asset mix for investors with a time horizon of more than two years THEN click the Short Term Portfolio link below the first question in the Asset Allocation Worksheet. Note: To return to the Asset Allocation Worksheet from the Short Term Portfolio, click the Previous button. Use the Asset Allocation Worksheet, as described below. To use the Asset Allocation Worksheet 1. For each question in the list, select the option that corresponds to the most appropriate response. 2. Click the Next button at the bottom of the page to move forward. 3. Repeat Steps 1 and 2 until you have answered all questions in the worksheet. If you do not answer all questions on the worksheet, you will be prompted to any missed answers before you can view results. Note: If you need to move to the previous page, click the Previous button at the bottom of the page. Result: A suggested asset mix and recommended portfolio display based on answers to the questions in the worksheet. 6 of 22 March 2001

7 Description of Results The suggested asset mix is based on answers to the questions concerning the time horizon for investment risk tolerance, and financial situation. The investor profile is matched to one of the following asset mix that may be appropriate for the situation: Conservative Balanced Growth Aggressive Growth To print results Click the Print button on your browser s toolbar. To view complete descriptions of all asset mixes Click on the other target asset mix portfolios link at the bottom of the window. March of 22

8 The Bond Income Calculator Use the Bond Income calculator to estimate price (based on the yield-to-maturity you enter) OR yield-to-maturity (based on the price you enter). You can then use this information to determine whether you are buying or selling bonds at a discount, premium, or par. Do not use this calculator for zero-coupon bonds and bonds with odd first or last coupon periods. The calculator does not account for financial holidays. Using the Bond Income Calculator To use the Bond Income Calculator 1. Select What you want to solve for: Bond Price OR Yield (yield to maturity). Select the bond type: Corporate/Municipal OR Treasury Note or Bond. To proceed to the Bond Information window, click the Continue button. 8 of 22 March 2001

9 Use the information in the table below to determine the appropriate next step. IF YOU ARE CACLULATING ENTER Price Yield the Bond Yield-to-Maturity percentage. the dollar amount of the Bond Price. For the Annual Coupon Rate, enter the rate of interest payable on the bond as a percentage of the principal amount (for example: 6.00% or 7.50%). For the Settlement Date, enter the date (mm/dd/yyyy) on which the trade will settle. Note: The trade will settle in three days from the date of purchase for corporate and municipal bonds, and one day from the date of purchase for treasury bonds. For Maturity Date, enter the date (mm/dd/yyyy) on which the principal on the bond is repaid, and the final coupon payment is made. Select the applicable Payment Frequency, as described in the table below. IF THE COUPON IS PAID once per year every six months every three months SELECT PAYMENT FREQUENCY Annual. Semi-Annual. Quarterly. 9. Use the information in the table below to determine your next step. IF THE BOND IS THEN callable for Call Date, enter the date (mm/dd/yyyy) on which the bond issuer may purchase the bond from you at a specified price, and for Call Price, enter the price at which the bond issuer may purchase the bond from you on the Call Date. not callable leave Call Date and Call Price fields blank 10. Click the Calculate button at the bottom of the screen. Description of Results The following tables describe the results of the bond income calculation. March of 22

10 If you were calculating for price: FIELD Cash Balance DESCRIPTION The Balance in the Cash Account, which does not include a position. Estimated Accrued Interest Estimated Bond Price Note: An amount in this field is usually the result of unsettled trades positive for sells; negative for buys that will be adjusted when the trade settles. The total accrued interest as of the settlement date. The quoted price of the bond. Estimated Invoice Price Note: The bond price is the present value of the future coupon payments. Estimated Bond Price + Estimated Accrued Interest. Note: The invoice price is the total amount the bond is worth. If you were calculating for yield: FIELD Estimated Yield To Call (YTC) Estimated Yield to Maturity (YTM) DESCRIPTION The yield on a bond, assuming the bond will be redeemed by the issuer at the first call date specified. The rate or return you will receive if an interestbearing investment (such as a bond) is held to its maturity date. To print results Click the Print button on your browser s toolbar. To view additional Bond Income scenarios Click the New Bond button the bottom of the window. 10 of 22 March 2001

11 College Planning Calculator Use the College Planning Calculator to calculate the cost of a college education, and determine the amount of money you will need to save to pay for the cost, both in current and future dollars. The calculations are merely suggestions and the final decision is the account owner's, based on individual situation, needs, goals, and aversion to risk, which may include factors beyond the scope of the calculator. Each result is based on the user's assessment of the worksheet questions. If any of these factors should change, the user should review the investment strategy. Accounting for Inflation Rate and Pre Tax Rate of Return When planning your college savings strategy, it is important to consider the relationship between the College Inflation Rate and your expected Pre-Tax Rate of Return. For example, the calculator selects the following default values 5% College Inflation Rate 8% Rate of Return. Using these defaults, your actual net pre-tax Rate of Return will be 3% (8% 5%). You may want to raise or lower the pre-tax Rate of Return value based on your comfort level with investment risk, and the number of years until your child will attend college. To determine the actual savings amount you will need to set aside each year to reach your goal, increase your calculated target amounts by the College Inflation Rate each year over the life of your savings. Using the College Planning Calculator To calculate college cost 1. Enter the child s current age. 2. Enter the number of years before the child enters college. March of 22

12 3. Enter the number of planned college years. (For example, four years is the typical duration for obtaining an undergraduate degree). 4. Enter the Pre-Tax Rate of Return. Note: The default is 8%, but you may enter any whole percentage that best reflects your personal investment style. (See Accounting for Inflation Rate and Pre-Tax Rate of Return, above). 5. Enter the College Inflation Rate. Note: The default is 5% annual increase, based on the current yearly rate at which college costs are rising. However, you may enter any whole percentage rate. (See Accounting for Inflation Rate and Pre-Tax Rate of Return, above). 6. Enter the approximate current cost of a private or public college education (including tuition, books, and room and board). If you know the current annual cost of a specific college, enter that number. 7. Click the Calculate button at the bottom of the screen. Description of Results The table below describes the College Planning calculation results. SECTION What You Selected DESCRIPTION A summary of the data that you entered into the calculator to compute your results. Total College Cost Results Note: To change and answer, click the New Planner button to return to the calculator. Total College Cost in Today s Dollars: The cost of college using today s dollar value. Total College Cost in Future Dollars: The cost of college in the future, using the College Inflation Rate you entered in the calculator. 12 of 22 March 2001

13 SECTION Target Savings DESCRIPTION The savings amount, in today s dollars, necessary to achieve the Total College Cost in Today s Dollars, represented in the following four savings plans: One-Time: A lump sum savings amount that, if invested based on your calculations, will provide the total college costs required. Annual: A pre-determined figure that, based on your calculations, is expected to be invested on a specific date once each year. Quarterly: A pre-determined figure that, based on your calculations, is expected to be invested on a specific date once every three months. Monthly: A pre-determined figure that, based on your calculations, is expected to be invested on a specific day each month. Customizing your Target Savings After the initial calculation is completed, you may customize a savings plan that is more conservative or aggressive. To Customize a Target Savings Plan 1. Click the Customize link associated with the Target Savings plan with which you want to work. Result: The Results Customizer displays. 2. Enter Your Affordable One Time Amount in Today s Dollars 3. Click the Calculate button. Result: Four new calculations display based on your entry: Total college costs in today s dollars Total Affordable savings in today s dollars, and Your savings excess/shortfall in today s dollars and future dollars. March of 22

14 To print results Click the Print button on your browser s toolbar. 14 of 22 March 2001

15 The Investment Growth Calculator Use the Investment Growth Calculator to estimate how much an investment amount in today s dollars might grow over time under certain variable conditions, such as years of investing rate of return, and tax rate. The variables that you choose are not meant to reflect the performance of any security or current economic condition. Investment Assumptions The Investment Growth Calculator calculates growth based on the following assumptions: annual investments are made at the beginning of each year. investment returns occur at the end of each year and are taxed at that time. All returns are taxed at the tax rate entered. Annual investments are made with after-tax dollars. The calculations are merely suggestions and the final decision is the account owner s, based on individual situation, needs, goals, and aversion to risk, which may include factors beyond the scope of the calculator. Each result is based on the user s assessment of the worksheet questions. If any of these factors should change, the user should review the investment strategy. Using the Investment Growth Calculator You can either enter values directly in the text boxes and press Enter to recalculate chart balances OR click on a corresponding slider box and drag the slider to the value you want to display n the text box. When you use sliders, the chart is automatically redrawn whenever a text box value changes. March of 22

16 Note: You can click the Reset button at any time to return all text boxes to their default values. To use the Investment Growth Calculator 1. In the Years of Investing box, enter the number of years for the investment to grow. 2. In the Initial Balances box, enter the principal amount you want to invest. 3. In the Annual Investment box, enter the amount of the investment you want to contribute each year. 4. Enter percentages for Rate of Return, Inflation, and Tax Rate. 5. If you want to factor in an increase in inflation over the number of years of investing, select the Increase Annual Investment with Inflation check box. 6. Select what you want to Show value as: Real (Net of Inflation) Dollars, or Nominal (Actual) Dollars. Description of Results The table below describes the results of the Investment Growth calculation. FIELD Compound Earnings Simple Earnings Amount Invested Total Value DESCRIPTION The amount earned (based on your Rate of Return) on Simple Earnings, plus any previous Compound Earnings. The amount earned (based on your Rate of Return) on your investment principal (including annual investment). The sum of your Initial Balance plus any Annual Investment for the number of years of the investment. The sum of your investment principal, plus Simple Earnings and Compound Earnings. Note: All earnings figures are presented after-tax. 16 of 22 March 2001

17 Retirement Planner Use the Retirement Planner to determine a savings strategy for personal retirement, based on when you will retire how much money you estimate you will need after you have stopped working from which sources you will receive retirement income how much you should save now to help you meet your retirement goals Accessing Retirement To access the Retirement Planner Select the tool you want to use from the left navigation menu, using the guidelines in the table below. IF YOU WANT an alphabetical glossary of financial and retirement terms an estimate of the growth of your retirement savings over time a demonstration of how the cost of everyday items affects your overall retirement savings SELECT Retirement Investing Concepts. Note: Refer to this section to understand the terms that you will see in the Retirement Planning Calculator and Spend Or Save Calculator. Retirement Planning Calculator. Spend Or Save Calculator. Using the Retirement Planning Calculator The Retirement Planning Calculator consists of a questionnaire containing 15 questions about your current income and savings as well as your long-term investment goals. Using assumptions that you provide about future inflation rates and investment returns, the calculator illustrates the hypothetical growth of your retirement savings over time. The calculator does not take into account income reducing factors such as taxes or yearly rises in income (for which you should increase your retirement savings as well). Therefore, all results are estimates meant for informational purposes only. After viewing results, you can change some of your answers to produce additional what if scenarios. To use the Retirement Planning Calculator 1. Select the option that best reflects your current marital status. Click the Begin Questionnaire button. Read the Important Legal Information paragraph, then click the I Understand button to continue. March of 22

18 Answer all of the Personal Profile questions that apply to you and/or your spouse, then click the Continue button. 2. Enter your Goal Planning information using today s dollars, then click the Continue button. 18 of 22 March 2001

19 Enter your Current Savings and Contributions (i.e., the amount you have already saved for retirement.) 3. If different from the default values, enter your hypothetical Investment Assumptions for Inflation Rate Pre-retirement rate of investment return, and Post-retirment rate of investment return. 4. When you have completed the questionnaire, click the Results button. March of 22

20 Description of Retirement Planning Calculator Results The Reirement Planning Calculator Results window provides a detailed description of your results, as shown below. To view a graphical representation of the estimated annual retirement income and some suggested additional savings to consider, click the Graph Results button. To view additional retirement planning scenarios 1. Click the New Calculation button at the bottom of graph results window. Repeat the procedure above. 20 of 22 March 2001

21 Using the Spend Or Save Calculator The Spend Or Save Calculator demonstrates how saving money today on everyday items, such as dining out and impulse purchases, can translate into savings for your retirement. While the cost of everyday items may not seem significant, when you put those amounts together and invest them, the savings toward your retirement can be significant. This calculator is intended to serve as an educational tool. While it enables you to enter hypothetical data, the variables you choose are not meant to reflect the performance of any security or investment product and are intended for illustrative purposes only. Actual rates of return will vary, particularly for long term investments. Investments offering potential for higher rates of return also involve a higher degree of risk. To use the Spend Or Save Calculator 1. Check the box corresponding to an item you want to cut back on. Note: To add an additional item: enter its description in an Add Description box, and select its associated checkbox. 2. Enter the dollar amount you can cut back by. 3. Select how often you plan to save the dollar amount: Annually Monthly, or Weekly 4. Repeat Steps 1-3 for each item you want to cut back on. 5. Enter the number of Years to Retirement the savings can be invested. 6. Enter a Rate of Return on Investment. 7. When you have completed all fields on the questionnaire, click the Calculate button. March of 22

22 Description of Results The Spend Or Save Calculator Results window provides a detailed description of your results, as shown below. To print results Click the Print button on your browser s toolbar. To view additional Spend Or Save scenarios 1. Click the Back to Calculator button at the bottom of the page. 2. Change one or more of the answers and assumptions on the questionnaire. 3. Click the Calculate button. 22 of 22 March 2001