Market Commentary
For the week of February 9, 2009

The Market
Investors shook off news that U.S. companies cut 598,000 jobs in January, the most since 1974, to focus
on the economic stimulus plan before Congress. Although unemployment now stands at 7.6 percent, the
highest rate since 1992, the major indexes posted their first week of gains after four consecutive weeks
of losses. The Dow ended the week up 3.7 percent to close at 8,280.59, and the S&P gained 5.3
percent to end the week at 868.60. The NASDAQ climbed 7.81 percent to finish the week at 1,591.71,
pushing into positive territory for the year to date.









Source: Morningstar.com. * Past performance is no guarantee of future results. Indexes are unmanaged and
cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week”
returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.

Service Shrink Slows The U.S. service sector contracted for the fourth consecutive month in January,
but at a slower pace than previous months. The Institute for Supply Management’s service sector index
rose to 42.9 last month, from 40.1 in December. A reading above 50 indicates growth, while a reading
below 50 signals contraction.

7-Year Itch The Treasury Department announced last week that it would reintroduce its seven-year
note and double the number of 30-year bond auctions from four to eight this year to address the soaring
budget deficit. The seven-year notes will be offered beginning later this month. The Treasury will auction
$67 billion worth of three-year, 10-year and 30-year Treasury securities this week, a record for a quarterly
refunding, according to the Associated Press.

Payback Every $1 billion spent to upgrade the country’s infrastructure creates an estimated 18,000
jobs, according to an economist from the University of Massachusetts (Source: BusinessWeek, BTN
Research).  

California Dreaming California Gov. Arnold Schwarzenegger warned that his state could become
insolvent “within weeks” on Thursday, Jan. 15, 2009. California is anticipating a $42 billion budget deficit
over the next year. If California was a country, it would have the eighth largest economy in the world
(Source: AP, FT, BTN Research).   
 

Baby Costs
The hospital cost to have a baby (excluding the physician’s fee) has increased 5.7
percent per year over the past 25 years (i.e., 1984-2008), almost twice the 3 percent annual Consumer
Price Index (
CPI) rate over the same period. The CPI is a measure of inflation compiled by the Bureau of
Labor Studies (Source: WSJ, DOL, BTN Research).     

WEEKLY FOCUS – IRS Allows Second 529 Plan Change in 2009

In a recently issued notice, the Treasury Department and
the Internal Revenue Service announced that owners of
529 college savings and
prepaid tuition plans can
change investment options twice during calendar year
2009, rather than just once. The exception, made only for
this year, is intended to help 529 owners adjust to the
dramatic changes in the financial markets.

529 plans, also called Qualified Tuition Plans or QTPs,
allow a family to make after-tax cash contributions for the
purpose of covering education-related expenses. Every
state sponsors at least one plan, and plans are managed
by investment companies. Withdrawals are tax free,
provided they don’t exceed the educational expenses,
which can include tuition, room and board, fees, books and other required equipment. Grants and
scholarships offset the expenses, and any excess from the 529 plan is then taxed. One winning feature of
529 plans has been the ability to roll the account to another
beneficiary. That way, if one child decides not
to attend college, or there is more money in the account than one child needs, the account balance can
be used for another child.

Plans can vary greatly from state to state in regard to using the funds at an in-state or out-of-state
institution, and most states allow residents from other states to invest in their plans. While federal law
requires a cap on allowable contributions to 529 plans, the cap amount differs from state to state. In
addition, plans can range greatly on the fees they charge, from enrollment fees to yearly maintenance
and management fees.

All those variations can make comparing plans and selecting one for your child or grandchild a daunting
task. Now you have the additional concern of whether to change investment options, and when. Our office
can help you determine whether a 529 plan makes sense for your child or grandchild, and can guide you
in selecting a plan that suits your family’s needs. Call our office for an appointment.

As with other investments, there are generally fees and expenses associated with participation in a 529 savings
plan. Qualified withdrawals are tax-free. Non-qualified withdrawals are subject to ordinary income tax and the
earnings may incur a 10 percent penalty. The tax implications of 529 plans can vary significantly from state to
state. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their
residents and taxpayers.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of
the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-
chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common
stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan
Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized
benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all
dividends. Written by Securities America. SAI# 293823
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Returns through 2/6/09
1 Week  
YTD
1-Year  
3-Year
5-Year
Dow Jones Industrials  
3.70
-5.27
-30.06
-6.09
-2.47
NASDAQ Composite
7.81
0.93
-30.15
-11.01
-5.06
S&P 500  
5.30
-3.57
-32.87
-9.91
-3.45
MSCI EAFE
2.34
-7.70
-41.26
-11.20
-0.52