Copyright ©2005 Ibbotson Associates, Inc. Downturns and Recoveries Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S. Clinton Street, Fort Wayne, IN , Phone Insurance offered through Lincoln affiliates and other fine companies. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. CRN
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/ –2004 Contraction Expansion Stocks Cumulative return Stock market contractions and expansions $0 $1 $10 $ % 0% 200% 400%
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Downturn Recovery 151 months 35 months 5 months 7 months 10 months 6 months 9 months 21 months 5 months 3 months 18 months 4 months 3 months -83.4% -21.8% -10.2% -15.0% -22.3% -15.6% -29.3% -42.6% -14.1% -16.9% -29.5% -14.7% -15.4% -44.7% 34 months 6 months 7 months 5 months 6 months 8 months 19 months 21 months 14 months 20 months 3 months 5 months 2 months 25 months Sept 1929 – June 1932July 1932 – Jan 1945 June 1946 – Nov 1946Dec 1946 – Oct 1949 Aug 1956 – Feb 1957March 1957 – July 1957 Aug 1957 – Dec 1957Jan 1958 – July 1958 Jan 1962 – June 1962July 1962 – April 1963 Feb 1966 – Sept 1966Oct 1966 – March 1967 Dec 1968 – June 1970 July 1970 – March 1971 Jan 1973 – Sept 1974Oct 1974 – June 1976 Jan 1977 – Feb 1978March 1978 – July 1978 Dec 1980 – July 1982Aug 1982 – Oct 1982 Sept 1987 – Nov 1987Dec 1987 – May 1989 June 1990 – Oct 1990Nov 1990 – Feb 1991 July 1998 – Aug 1998Sept 1998 – Nov 1998 Sept 2000 – Sept –2004 Market downturns and recoveries
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Average stock market return is 10.4%. 1926–2004 Periods of consecutive negative stock returns Return -60% -40% -20% 0% 20% 40% % -43% 54% -25% -8% % 20% -0.4% -12% % 37% -26% -9% -12% -22% % %
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/ $1 $10 $100 $.10 $1, Shaded regions denote economic recessions Hypothetical value of $1 invested at year-end Assumes reinvestment of income and no transaction costs or taxes. 1945–2004 Stock performance during recessions
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Cumulative returns of large and small stocks after recessions 1945– – % 11.4% 19.1% 3.8% 20.1% 33.7% 74.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% After 1 monthAfter 6 monthsAfter 1 year After 3 years Small company stocks Large company stocks Stock performance after recessions 47.7%
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Each bar shows the range of yield for each bond over the time period July 1954 to December July 1954–December 2004 History of interest rates Current 0% 5% 10% 15% 20% 1 yr yldIT gvt yldLT gvt yldFed funds Average 6.43% 6.85% 5.78% 5.86%
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 January 1946 through December 2004 Shaded regions denote economic recessions U.S. short-term gov’t bonds (4/53–12/04) U.S. long-term gov’t bonds Bond yields during recessions 1946– % 4.8% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/ %13 monthsNov 71–Dec % 31 monthsDec 74–Jul %3 monthsMay 80–Aug % 28 monthsNov 81–Mar % 40 monthsDec 90–Apr %42 monthsJan 96–Jul months Nov 84–Aug % -2.2% 41 months Jan 01–Jun 04 Annualized monthly returns, July 1971–December 2004 ^ Entire period average = 12.0% *Period length and calculation exclude the month of initial change in policy to measure “pure” monetary policy environment. Stock returns and monetary policy -1.9%3 monthsJul 71–Oct %-30%-20%-10%0% 20%30%40%50% ExpansiveRestrictive Monetary periodPeriod length* Average Return 25.1%5 monthsJul 04–Dec %16 monthsAug 99–Dec %19 monthsMay 94–Dec monthsSep 87–Nov 905.6% 13.9%6 monthsApr 84–Oct %13 monthsSep 80–Oct monthsAug 77–Apr 809.9% -21.4%22 monthsJan 73–Nov % ^
Copyright ©2004 Ibbotson Associates, Inc. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Monthly data is assumed. Returns reflect the percentage change in the index level from the end of the month that the event occurred to 1 month, 6 months, 1 year, and 3 years after. -30% -10% 10% 30% 50% 70% 90% Feb 26, 1993 World Trade Center bombed After 1 month After 6 months After 1 year Dec 7, 1941 Pearl Harbor After 3 years Sept 11, 2001 Terrorist attack Aug 2, 1990 Iraq invades Kuwait Cumulative return of the S&P 500 after tragic events U.S. market recovery after tragedy 12.6