Burton G. Malkiel Chemical Bank Chairman’s Professor of Economics Princeton University “Investing in a Restrained Market” University of Pennsylvania January 17, 2006

Exhibit 1

Exhibit 2 January, 2006

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Exhibit 5

Exhibit 6 So Does Rebalancing

Exhibit 7

Exhibit 8 Asset Allocation for Person in Mid-Fifties

Suggested Asset Allocation Retirement Portfolio Exhibit 9

Exhibit 10 BOW TO THE WISDOM OF THE MARKET Markets are reasonably efficient Index Funds Outperform Past is not prologue

The Case for Indexing continues to be strong The Case for Active Management continues to be weak Percent of Large Capitalization Equity Funds Outperformed by Index Ending December 31, Yr 3 Yrs 5 Yrs 10 Yrs 20 Yrs S&P vs. Large Cap Equity 74%76%63%86%90% Funds Exhibit 11

Exhibit 12 Index Funds tend to outperform by Over Two Percentage Points Comparison of Returns-Average Equity Fund vs. Indexes 10 Yrs 20 Yrs to 12/31/04 to 12/31/04 S&P 500 Index 12.00% 12.78% Average Equity Fund* 9.30% 10.54% S&P 500 Advantage (percentage points) Source: Lipper, Wilshire, & the Vanguard Group. *Consists of ALL Lipper equity categories.

Exhibit 13

Fund Name 12/31/ /31/1999 Ann Total Return 12/31/ /31/2002 Ann Total Return 99 – 02 Rank (851 total funds) 1 Rydex: OTC Fund; Inv RS Inv: Emerg Growth Morg Stan Cap Oppty; B Janus Olympus Fund Janus Twenty Managers: Capital Apprec Janus Mercury Fidelity Aggr Growth Van Wagoner: Emrg Growth WM: Growth; A Janus Venture Van Kampen Emerg Growth;A Fidelity New Millennium PBHG: Sel Equity;PBHG Janus Enterprise TCW Galileo:SC Growth;Instl Morg Stan Inst: MC Growth;l Morg Stan Spec Growth;B IDEX: Jan Growth;T ING: SmCp Opptys;B Average – Top S&P Exhibit 14 Getting Burned by Hot Funds

Exhibit 15

Exhibit 16 Percentage of Actively Managed Bond Funds Outperformed by Benchmark 10 Years Ended 12/31/04 Short-term Intermediate-term Long-term Gov’t.Corp.GNMAHigh-Yield 98%100%90%83% Source: Lipper Inc. and Morningstar, Inc.

Exhibit 17 How to Buy Bonds Taxable vs. Tax Exempt Mutual Funds NJ/PA Money Market Fund NJ/PA (insured) Long-Term Bond Fund Buy Bonds Directly Only buy insured new issues Yields today about 4½% for insured bonds (AAA)

Exhibit 18 DON’T BE YOUR OWN WORST ENEMY AVOID STUPID INVESTOR TRICKS Overconfidence Herding Loss Aversion A couple of other common errors - Hot tip Investing - New Issue Investing

Exhibit 19 Retirement Strategies Buy Annuities Pro: Surest way to guarantee you won’t Outlive your money Con: Expensive, inflexible, and inconsistent With a bequest motive. Do it Yourself 1. Determine the takeout rate Assume Portfolio half equities (7 ½ % return) and half bonds (5% return). Average return6 ¼ % Minus Inflation Adjustment2 % Takeout rate4 ¼ % 2. Rebalance– Take money out of best performing asset class