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A Newsletter for the State of Connecticut Deferred Compensation Plan

August 2000

	This issue of "Getting There" provides you with a five-minute risk tolerance quiz to help you find your investment style and lists places where you can learn more about investing and personal finance.
State Comptroller Nancy Wyman

Understand Your Risk Tolerance

Knowing your relationship to money and investing is an important part of being a successful investor. Taking this five-minute quiz can help you judge how comfortable you are with risk.

Which of the following best describes your feelings about investing?

1. "Better safe than sorry."
2. "Moderation in all things."
3. "Nothing ventured, nothing gained."

Your stock funds have dropped 20% since last quarter. The market experts are optimistic. What would you do?

1. Pull my money out of stocks to avoid losing more money.
2. Stay in stocks and wait for them to turn around.
3. Shift more money into stocks. This is an opportunity to pick up some bargains.

Would you borrow money to make a good investment?

1. Never.
2. Maybe.
3. Yes.

Which of these prizes would you select?

1. $5,000 in cash.
2. A 50% chance to win $10,000.
3. A 20% chance to win $100,000.

Source: Your Financial Future by Buck Consultants, Inc. and Standard & Poor's

What the Quiz Results Mean to Me

If you are...

• conservative, you want your money to be "safe," so you don't want to risk losing any of it. Risks to watch out for are inflation - the possibility that your investments won't grow fast enough to beat increases in the cost of living - and retirement risk - the possibility that you won't build a nest egg big enough to retire.

• moderate, you're willing to assume some degree of risk to get higher potential returns. However, being a moderate investor doesn't mean you're off the hook. You'll still need to track the performance of your investments to achieve your desired rate of return.

• aggressive, your goal is to build future wealth as fast as possible. You're willing to take risks to achieve your goal. Watch out for investment risk - the chance that you may lose some or all of your principal - and market risk - the threat that changes in the marketplace will cause your stocks and bonds to have less value.

As an investor, you can't avoid risk entirely. Every investment carries some level of risk. Whether you are a conservative, moderate or aggressive investor, the key to being successful is to counteract risk by diversifying your investments - spreading your money out over different investment types (cash, bonds and stocks). Diversification helps you balance your tolerance for risk against the rate of return you want to obtain. Know your style and plan accordingly.

Your Investing and Personal Finance Resources

When it comes to planning for your retirement, experts agree: There's no substitute for research. But with so much information out there to wade through, how can you make sense of it all and whose opinion can you trust? These resources provide reliable, useful information on many aspects of investing and personal finance.

Books

The Coffeehouse Investor by Bill Schultheis. For those who think investing is a necessary evil. Subtitled How to Build Wealth, Ignore Wall Street and Get on with Your Life.

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by John C. Bogle Vanguard founder discusses basics, low fees, tax-efficient investing and ethical money management.

One Up on Wall Street by Peter Lynch and John Rothchild Investment guru Lynch says with a little research you can get returns like the pros.

The Only Investment Guide You'll Ever Need by Andrew Tobias Just getting started? This classic is so much fun to read, it'll leave you hungering for more.

Web Sites

www.financenter.com Learn about personal finance and use their nifty calculators.

www.money.com Take their Investing IQ quiz and find out how much you know about investing.

www.Morningstar.com Well known to industry analysts as a great source for researching funds.

www.smartmoney.com The Wall Street Journal's comprehensive site is easy to navigate.

Investment Fund Performance & Operating Fees

For the Period Ending June 30, 2000

You may invest your contributions with any one of the plan's three financial services organizations: Aetna Investment Services, Inc., Hartford Life Insurance Company and Phoenix Investment Partners.

The following charts will help you evaluate your investment choices - both mutual funds and annuity options. They show the historical rates of return for each financial services organization's available investment options and the various operating fees that may be assessed against these options for the period ending June 30, 2000.

The rates of return columns are "net of expenses" and reflect the actual returns that would be applied to your account. This means that they already exclude the operating fees a financial services organization may charge you for managing, investing or marketing a particular investment option. Operating expenses appear in separate columns.

About Your Fund Choices

To help you identify between these two types of options, variable annuities appear in italic print. When comparing two similarly styled mutual funds or annuity options, be sure to:

Recognize that while a fund's past performance may help you understand how well or poorly it has performed over a period of time, it's no guarantee of future results.

Consider the total expenses each fund charges as well as the kinds of services or benefits it provides. Keep in mind that you can reduce your overall investing costs by monitoring these expenses and taking them into account in your investment selection process.

Since each financial services organization offers similar investment opportunities, it's a good idea to review the materials from each of these organizations before you make your decision as to where to invest your money. Then, select the one financial services organization that offers the investment options and products that best match your personal financial goals.

* After the close of business on November 26, 1997, the PPI MFS Emerging Equities fund replaced the Alger American Small Cap fund and the PPI Scudder International fund replaced the Scudder VLIF International fund. The five-year rate of return includes performance for the Alger American Small Cap and the Scudder VLIF International funds from 6/30/95 to 11/26/97 and the current funds from 11/27/97 to the present. For more information, please call your Aetna representative.