Stock Market Volatility and Your Plan

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2 Stock Market Volatility and Your Plan Stay in for the Long Term When Investing for Retirement

3 How Asset Classes Have Performed Historically Source: Underlying data is from the Stocks, Bonds, Bills, and Inflation® (SBBI®) Yearbook, by Roger G. Ibbotson and Rex Sinquefield, updated annually. Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of Assumes reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 Small stocks in this example are represented by the fifth capitalization quintile of stocks on the NYSE for and the performance of the Dimensional Fund Advisors, Inc. (DFA) U.S. Micro Cap Portfolio thereafter. Large stocks are represented by the Standard & Poor’s 500 ®, which is an unmanaged group of securities and considered to be representative of the stock market in general. Government bonds are represented by the 20-year U.S. government bond, Treasury bills by the 30-day U.S. Treasury bill, and inflation by the Consumer Price Index. Stocks represent ownership in a corporation, while bonds, if held to maturity, offer a fixed rate of return and fixed principal value. Small company stocks are generally more volatile than large company stocks. Government bonds and treasury bills are guaranteed by the full faith and credit of the U.S. government as to the timely payment of principal and interest, while corporate bonds are not guaranteed – 2007 Small stocks 13.5%Large stocks 11.8%Government bonds 9.3%Treasury bills 4.5%Inflation 3.0% Compound annual return $20 $2.41 $1.82 $5.89 $9.33 $

4 Keep a Long-Term Perspective Don’t Confuse “Low Risk” with “No Risk” Average Annual Returns for Stocks, Bonds and Cash Past performance is no guarantee of future results. Source: Morningstar, Inc., March % 8.6% 3.1% 4.5% Large Co. Stocks (S&P 500) U.S. Gov’t. Bonds T-Bills (Cash) Inflation (CPI)

5 1 As of May 12, TV Guide, January U.S. Bureau of Labor Statistics, November National Automobile Dealers Association, May U.S. Department of Housing & Urban Development, November Trends in College Pricing 2007, The College Board’s Annual Survey of Colleges, Item1980Current First-Class Stamp$0.15$ TV Guide$0.40$ Loaf of Bread$0.52$ Average New Car $7,571$28,451 4 Average New Home$64,600$298,500 5 College Education$4,806$13,589 6 (4-year public annual tuition and room and board) Keep a Long-Term Perspective Consider the Rising Cost of Some Basic Items

6 Begins Age 25 This illustration reflects clients with a $25,000 annual salary making 6% contributions with an 8% rate of return compounded monthly. This illustration is hypothetical and not intended to represent the performance of any specific investment. Distributions from tax-deferred retirement accounts are subject to income taxes and a possible 10% early distribution penalty. Jack contributes $15,000 $250,081 $436,375 Stops Age 35 Jane contributes $60,000 Ending Balance at Age 65 Begins Age 25 Stops Age 65 Keep a Long-term Perspective Consider the Potential Rewards of Being a Consistent Investor

7 Dollar-Cost Averaging Illustration  Average COST paid for shares:$1,200 ÷ 115 shares=$10.43  Average market share PRICE (over the six-month period):$68 ÷ 6 months=$11.33 MonthlyShares AmountSharePurchased MonthInvestedPriceEach Month January$200$ February$200$825.0 March$200$ April$200$ May$200$ June$200$825.0 TOTAL$1,200$

8 Keep a Long-term Perspective Consider the Number of Years You Have Left Until Retirement  The longer your time horizon, the more risk you should be willing to withstand, giving you: — the ability to ride out the ups and downs of more volatile investments.  With 10 or more years left until retirement, stock investments still have a place in your retirement portfolio: — think about the retirement years you need to finance, and — keep your retirement money working hard for you.

9 * Source:U.S. Bureau of the Census Keep a Long-Term Perspective People are Spending More Time in Retirement Life Expectancy after Age 65 (Years in Retirement)

10 Re-Evaluate Your Asset Allocation Strategy Consider your:  Risk Tolerance  Investment Goals  Time Horizon  Financial Situation

11 Rebalance Your Account Periodically Originally, your diversified retirement portfolio may have looked something like this... But, today your retirement portfolio may look more like this... Stocks Bonds Stable Value

12 Powerful Reasons to Continue Investing in Your Retirement Plan  Social Security Uncertainty  The Absence of a Pension Plan  Increased Life Span  Tax-Deferred Growth of Investments and Earnings

13 Keep Your Plan on Track  Maintain a Long-Term Perspective  Review Your Asset Allocation Strategy and Rebalance Periodically  Remember the Reasons You Joined Your Plan

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