LPL Financial Research: Independent Advice for the Retirement Plan Market LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution

1 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Our Mission and Standards Our Mission  We strive to deliver outstanding investment performance and service  We aim to provide comprehensive research and advice  We hope to be a key resource and component of our advisors’ investment decision making to help them better serve you—their client Our Standards  Freedom: A broad range of advice and communications that your advisor can selectively choose from to help meet your needs  Communication: Key commentaries on a variety of topics for your advisor, you, and your participants  Service: Dedicated Research-focused service team for your advisor  Approach: Time-tested, rigorous analytical methods strengthened by a research environment that fosters integrity  Commitment: Provide resources for your advisor so they have more time and resources to dedicate to you

2 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Our Role and Independence To provide conflict-free, objective, timely, actionable, investment research and advice by:  Identifying above-average investment opportunities, conducting ongoing and thorough due diligence, while providing quality advice with complete transparency,  Performing quantitative analysis, performance measurement, attribution, and appraisal of our advice, and  Delivering timely communications and service To accomplish this, we:  Have no proprietary products to sell  Have no investment banking relationships to promote  Have no other business conflicts to get in the way of providing unbiased recommendations  Are compensated based on performance of our recommended investments and advice, not revenue-sharing arrangements

3 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Our Structure

4 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Investment Analysis Scorecard: Overview Basic Premise  Designed to help you and your advisor establish and monitor your plan’s investment line up  Can assist in helping you fulfill your fiduciary responsibilities as set forth under ERISA  Review data from the past 5 years and analyze 12 factors in a pass-fail system and equally weight the factors  Maximum total score = 12 o 10 or greater  the investment earns Blue Ribbon status o 6 or below  the investment falls onto the Watch List o 7 through 9  the investment is suitable We believe…  Investments should be evaluated on more than just historical returns  The process should be consistent, simplistic yet sophisticated, and repeatable

5 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Investment Analysis Scorecard: Methodology Snapshot

6 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Investment Analysis Scorecard: Factor Details Style-Related Factors (16.7% of total score)  Style drift* < 20 o When selecting an investment, you want to know that it has provided a relatively “true” exposure to the category in which it falls o A style drift score of less than 20 implies that the divergence of an investment portfolio from its stated investment style or objective as measured by the drift from the Morningstar category is minimal  R 2 ≥ 80% o When selecting an investment, you want to know how correlated the investment’s returns are with its benchmark index o This value of R 2 implies that the investment’s return moves in the same direction as the index 80% or more of the time * Please note: For target date funds, style drift is expected and therefore, not a useful statistic to evaluate. For these funds, instead of style drift, we use the risk/return ratio. If the return/risk ratio is greater than 1, the investment receives a score of 1.

7 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Investment Analysis Scorecard: Factor Details Return-Based Factors (33.3% of total score)  1-, 3-, and 5-year return > peer group median o When selecting an investment, you want to know that it has demonstrated an ability to outperform relative to its peers o A total return greater than the peer group median implies that the investment has outperformed more than half of other investments in its same category o The investment can potentially receive 1 point for each time period: 1-, 3-, and 5-years  Up capture/Down capture > 1 o When selecting an investment, you want to know that it “captures” more than 100% of market returns in up markets and helps “cushion” the loss in down markets by capturing less than 100% of the fall o A ratio of greater than 1 implies that the investment captures more when the market is up than when it is down

8 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Investment Analysis Scorecard: Factor Details Risk-Based Factors (33.3% of total score)  3- and 5-year Information Ratio > 0 o When selecting an investment, you want to know how its returns compare to the index and to the amount of risk it took to generate those returns o An Information Ratio greater than 0 implies that the investment outperformed its benchmark index  0.75 < 3- and 5-year Beta < 1.15 o When selecting an investment, you want to know how much risk the manager takes on relative to their benchmark index. You want managers to take some risk—as you need to take some risk to generate decent returns—but, not so much risk that it is egregious. o A Beta of 1 means that the manager is taking on the same level of risk as the benchmark index o A Beta between 0.75 and 1.15 implies that the manager is taking on risk that is between 75% and 115% of the benchmark index

9 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Investment Analysis Scorecard: Factor Details Qualitative Factors (16.7% of total score)  Gross expense ratio ≤ category average o When selecting an investment, you want to know how much it costs as total fees reduce the total return captured by the investor o An expense ratio less than the category average implies that the fund charges no more than the average of all others that fall into the same category  Longest manager tenure > category average o When selecting an investment, you want to know that the track record being reviewed is primarily one from the current management team o A tenure greater than the category average implies that the manager has been on the investment team for a relatively long period of time

10 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Key Communications to Keep You Informed Weekly Market Commentary Market Insight Overarching market commentaries 2011 Outlook Weekly Economic Commentary Bond Market Perspectives Overarching forward- looking viewpoint for the entire year Weekly updates on specific areas Quarterly recap of the previous quarter (available in the FIRM template or PDF with accompanying letter)

11 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Key Communications to Keep You Informed Highlighting specific areas of focus Tracking overall market conditions Current Conditions Index Sector Strategy Letters Portfolio Compass Detailing equity sectors Boiling down key events Quantifying our viewpoint on different areas of the economy and markets

12 LPL FINANCIAL RESEARCH For Plan Sponsor or Investment Professional Use Only Not For Participant Use Not For Client Distribution Thank you for your business LPL FINANCIAL RESEARCH This research material has been prepared by LPL Financial. The LPL Financial family of affiliated companies includes LPL Financial and UVEST Financial Services Group, Inc., each of which is a member of FINRA/SIPC. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity.