1. Capital Markets Charts Series (Risk and Volatility) IFS-A Charts Reminder: You must include the Glossary of Indices and disclosure pages with all charts you select to use, either individually or as a group. Information as of December 31, 2003 unless otherwise noted

2. Risk & Volatility Power of Diversification
Number of Stocks in Portfolio
Risk
This chart conveys the potential benefits of diversification based on a study by Ibbotson Associates. In general, by increasing the number of stocks in a portfolio, company specific risk can be reduced.
Source: Ibbotson Associates, Chicago.
Risk is defined as Standard Deviation. Diversification seeks to balance (as in an investment portfolio) defensively by dividing funds among securities of different industries or of different classes. Past performance is not indicative of future results. Presented to provide you with an understanding of historic long-term performance, and is not presented to illustrate the performance of any security.

3. Risk vs. Return December 1926 – December 2003
Risk (STD)
Return (AM)
Risk vs. Return December 1926 – December 2003
0.0%
40.0%
3.0%
6.0%
9.0%
12.0%
15.0%
18.0%
21.0%
24.0%
27.0%
30.0%
33.0%
36.0%
19.0%
4.0%
5.0%
7.0%
8.0%
10.0%
11.0%
13.0%
14.0%
16.0%
17.0%
U.S. 30 Day TBill TR
U.S. IT Gvt TR
U.S. LT Corp TR
U.S. LT Gvt TR
S&P 500 TR
U.S. Small Stk TR
This chart shows the average annual return since 1926 for various asset classes on the Y-axis with their corresponding volatility (standard deviation) on the X-axis. The risk/return relationship is clearly demonstrated.
Source: Ibbotson Associates, Chicago
Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. The prices of small company stocks are generally more volatile than those of large company stocks. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of indices for index descriptions.

4. Risk vs. Return 1973 – 2003 30 Years with International
Risk (STD)
Return (AM)
Risk vs. Return 1973 – Years with International
1.0%
25.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
23.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
U.S. 30 Day TBill TR
U.S. IT Gvt TR
U.S. LT Corp TR
U.S. LT Gvt TR
S&P 500 TR
U.S. Small Stk TR
MSCI EAFE TR
This chart shows the average annual return since 1973 for various asset classes on the Y-axis with their corresponding volatility (standard deviation) on the X-axis. The risk/return relationship is clearly demonstrated. An international equities index (MSCI EAFE) is added as an additional asset class to demonstrate its relationship with domestic asset classes. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political, social, economic changes
Source: Ibbotson Associates, Chicago.
Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. Stocks offer growth potential, but fluctuate more than other investments. The prices of small company stocks are generally more volatile than those of large company stocks. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political, social, economic changes. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions.

5. Risk vs. Return 1983 – 2003 20 Years with International
Risk (STD)
Return (AM)
Risk vs. Return 1983 – Years with International
1.0%
26.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
23.0%
4.0%
16.0%
4.5%
5.5%
6.0%
6.5%
7.5%
8.0%
8.5%
9.5%
10.0%
10.5%
11.5%
12.0%
12.5%
13.5%
14.0%
14.5%
15.5%
U.S. 30 Day TBill TR
U.S. IT Gvt TR
U.S. LT Corp TR
U.S. LT Gvt TR
S&P 500 TR
U.S. Small Stk TR
MSCI EAFE TR
This chart shows the average annual return since 1983 for various asset classes on the Y-axis with their corresponding volatility (standard deviation) on the X-axis. The risk/return relationship is clearly demonstrated. An international equities index (MSCI EAFE) is added as an additional asset class to demonstrate its relationship with domestic asset classes. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political, social, economic changes
Source: Ibbotson Associates, Chicago.
Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. Stocks offer growth potential, but fluctuate more than other investments. The prices of small company stocks are generally more volatile than those of large company stocks. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political,social, economic changes. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions.

6. Risk vs. Return 1993 – 2003 10 Years with International
Risk (STD)
Return (AM)
Risk vs. Return 1993 – Years with International
0.0%
23.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
U.S. 30 Day TBill TR
U.S. IT Gvt TR
U.S. LT Corp TR
U.S. LT Gvt TR
S&P 500 TR
U.S. Small Stk TR
MSCI EAFE TR
This chart shows the average annual return since 1993 for various asset classes on the Y-axis with their corresponding volatility (standard deviation) on the X-axis. The risk/return relationship is clearly demonstrated. An international equities index (MSCI EAFE) is added as an additional asset class to demonstrate its relationship with domestic asset classes. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political, social, economic changes
Source: Ibbotson Associates, Chicago.
Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. Stocks offer growth potential, but fluctuate more than other investments. The prices of small company stocks are generally more volatile than those of large company stocks. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political, social, economic changes. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions.

7. Range of Returns – Highs & Lows 1926 to 2003
U.S. Small Stk TR
S&P 500 TR
U.S. LT Corp TR
U.S. LT Gvt TR
U.S. 30 Day TBill TR
-70.0%
160.0%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
120.0%
130.0%
140.0%
150.0%
142.9%
-58.0%
54.0%
-43.3%
42.6%
-8.1%
40.4%
-9.2%
14.7%
Highest:
Average:
Lowest:
Legend
This chart shows the range of returns, from highest one year return to lowest one year return since 1926, for each asset class. This helps an investor understand how volatile an asset’s returns have been over long periods of time.
Source: Ibbotson Associates, Chicago.
Gov’t bonds & Treasury bills are guaranteed by the US Gov’t And if held to maturity, offer a fixed rate or return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. Presented to provide you with an understanding of historic long-term performance. And is not presented to illustrate the performance of any security. The prices of Small company stock are generally more volatile than those of large company stocks. Past performance is not indicative of future results. Individual investor Results will vary. See Glossary of Indices for index descriptions.

8. Range of Returns – Highs & Lows 1970 – 2003
With International
Return
Legend
80.0%
Highest:
75.0%
69.9%
70.0%
60.7%
65.0%
60.0%
55.0%
50.0%
42.6%
40.4%
45.0%
37.4%
40.0%
35.0%
29.1%
30.0%
25.0%
20.0%
14.7%
Average:
15.0%
10.0%
5.0%
0.0%
1.0%
-5.0%
-5.1%
-10.0%
-7.4%
-9.0%
-15.0%
-20.0%
This chart shows the range of returns, from highest one year return to lowest one year return since 1970, for each asset class. International equity is included. This helps an investor understand how volatile an asset’s returns have been over long periods of time. Investing in foreign/international securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political, social, economic changes
-25.0%
-23.2%
-30.0%
-26.5%
-30.9%
-35.0%
-40.0%
Lowest:
MSCI EAFE TR
U.S. Small Stk TR
U.S. LT Corp TR
U.S. LT Gvt TR
S&P 500 TR
U.S. IT Gvt TR
U.S. 30 Day TBill TR
Source: Ibbotson Associates, Chicago.
Gov’t bonds & Treasury bills are guaranteed by the US Gov’t And if held to maturity, offer a fixed rate or return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. Presented to provide you with an understanding of historic long-term performance And is not presented to illustrate the performance of any security. Stocks offer growth potential, but fluctuate more than other investments. The prices of Small company stock are generally more volatile than those of large company Stocks. Past performance is not indicative of future results. Individual investor Results will vary. See Glossary of Indices for index descriptions.

9. Risk/Return Spectrum Small Company Stocks International Stocks
Higher Return
Higher Risk
Small Company Stocks
International Stocks
Large Company Stocks
Corporate Bonds
Government Bonds
This chart is used to convey the risk/return characteristics of small, large, and international stocks, corporate and government bonds, and money market instruments. Generally, the greater the return, the greater the risk.
Cash Equivalents
Lower Return
Lower Risk
Source: Ibbotson Associates, Chicago
Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Stocks represent ownership in a company and are not guaranteed and have been more volatility than fixed income investments. Corporate bonds are debt obligations and are backed by the claims paying ability of the issuer. The prices of small company stocks are generally more volatile than those of large company stocks. Past performance is not indicative of future results. Individual investor results will vary.

10. Glossary of Indices
The indices are presented to provide you with an understanding of their historic long-term performance, and are not presented to illustrate the performance of any security. Investors cannot directly purchase any index. Past performance is not indicative of future results. Individual investor results will vary.
Inflation: The Consumer Price Index for all Urban Consumers (CPI-U), not seasonally adjusted, is used to measure inflation, which is the rate of change of consumer good prices. All of the security returns are measured from one month-end to the next month-end. CPI commodity returns are collected during the month. Thus, measured inflation rates lag the other series by about one-half month. Prior to January 1978, the CPI (as compared with CPI-U) was used. Both inflation measures are constructed by the U.S. Department of Labor, Bureau of Labor Statistics.
International Stocks: The returns for International Stocks are based on the Morgan Stanley Capital International Europe, Australia, Far East Index (MSCI EAFE) for the period MSCI EAFE is a market value-weighted average of over 900 securities listed on stock exchanges in the developed countries in the regions listed above. The index includes reinvestment of gross dividends before deduction of withholding taxes.
Large Stocks: The large stock total return index is based upon the Standard and Poor’s composite index. The S&P 500 is an unmanaged weighted index of 500 stocks providing a broad indicator of price movement.
Lehman Brothers Credit Bond Index: Composed of all publicly issued, fixed rate, nonconvertible, and investment-grade corporate debt. Issues are rated at least Baa by Moody’s Investors Service or BBB by Standard & Poor’s, if unrated by Moody’s. Collateralized Mortgage Obligations (CMO’s) are not included. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization.
Lehman Brothers Credit - Intermediate Bond Index: A subset of the Lehman Brothers Corporate Bond Index covering all corporate, publicly issued, fixed-rate, nonconvertible US debt issues rated at least Baa by Moody’s or BBB by Standard & Poor’s with at least $50 million principal outstanding and maturity greater than 10 years.
Lehman Brothers Government Bond Index: Composed of all publicly issued, nonconvertible, domestic debt of the US Government or any agency thereof, quasi-federal corporations, or corporate debt guaranteed by the US Government, flower bonds and pass-through issues are excluded. Total return compromises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. Lehman Brothers Government – Intermediate Bond Index: Composed of all publicly issued, nonconvertible, domestic debt of the US Government or any agency thereof, quasi-federal corporations, or corporate debt guaranteed by the US Government, flower bonds and pass-through issues are excluded, with maturities between one and 9.99 years. Total return compromises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization.

11. Glossary of Indices (continued from previous page)
Long-Term Corporate Bonds: For , corporate bond total returns are represented by the Salomon Brothers’ Long-Term High Grade Corporate Bond Index. The index includes nearly all Aaa and Aa rated bonds. Over , the total returns were calculated by summing the capital appreciation returns and the income returns. For the period , Ibbotson and Sinquefeld backdated the Salomon Brothers’ Index, using Salomon Brothers’ monthly yield data with a methodology similar to that used by Salomon for Capital appreciation returns were calculated from yields assuming a 20-year maturity, a bond price equal to par, and a coupon equal to the beginning of the period yield. For the period , the Standard & Poor’s monthly High Grade Corporate Composite Yield data were used, assuming a 4% coupon and a 20-year maturity. The conventional present value formula for bond price was used for the beginning and end of the month prices. Long-Term Government Bonds: The total returns on long-term government bonds from are constructed with data from the “Wall Street Journal.” Over , data are obtained from the Government’s file at the Center for Research in Security Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a one-year bond portfolio with a term of approximately 20 years and a reasonably current coupon and whose returns did not reflect potential tax benefits, impaired negotiability, or special redemption or call privileges, was used. Where callable bonds had to be used, the term of the bond was assumed to be a simple average of the maturity and first call dates minus the current date. The bond was held for the calendar year and returns were computed. NAREIT Share Price Equity Index: All of the data is based upon the last closing price of the month for all tax-qualified REITs listed on the New York Stock Exchange, American Stock Exchange, and the NASDAQ National Market System. The data is market weighted. The total return calculation is based upon the weighting at the beginning of the period depending upon whether it is one month, three months, or 12 months. Only those REITS listed for the entire period are used in the total return calculation. Dividends are included in the month based upon their payment date. There is no smoothing of income. Liquidating dividends, whether full or partial, are treated as income. This has the effect of negatively biasing the price appreciation component of the index but results in accurate realized income and total return numbers. The annualized return numbers are market weighted with the most recent dividend annualized plus any extraordinary dividends included, divided by the most recent price Russell 3000 Index: The Russell 3000 Index is composed of the 3,000 largest US securities, as determined by total market capitalization Russell 2000 Index: Consists of the smallest 2,000 securities in the Russell 3000 Index. This is the Frank Russell Company’s small capitalization index that is widely regarded in the industry as the premier measure of small capitalization stocks. Russell 1000 Index: Consists of the 1,000 largest securities in the Russell 3000 Index. This large capitalization (market-oriented) index represents the universe of stocks from which most active money managers typically select. The Russell 1,000 is highly correlated with the S&P 500 Index. Russell 1000 Growth: Measures the performance of those Russell 1000 Companies with higher price-to-book rations and higher forecasted growth values. Russell 1000 Value: Measures the performance of those Russell 1000 companies with lower price-to-book rations and lower forecasted growth values Russell Midcap Index: Measures the performance of the 800 smallest companies in the Russell 1000 Index.

12. Glossary of Indices (continued from previous page)
Russell 2000 Value Index: Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index consists of the smallest 2,000 securities in the Russell 3000 Index. The Russell 3000 Index is composed of the 3,000 largest U.S. securities, as determined by total market capitalization. Russell 2000 Growth Index: Measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index consists of the smallest 2,000 securities in the Russell 3,000 Index. Small Stocks: For , the small company stock return series is the total return achieved by the Dimensional Fund Advisors (DFA) Small Company 9/10 Fund. This fund is a market value-weighted index of the ninth and tenth deciles of the New York Stock Exchange (NYSE), plus stocks listed on the American Stock Exchange (AMEX) and over the counter (OTC) with same or less capitalization as the upper bound of the NYSE ninth decile. The equities of smaller companies from are represented by the historical series developed by Professor Rolf W. Banz. This is composed of stocks making up the fifth quintile of the NYSE. For 1981, Dimensional Fund Advisors, Inc. updated the returns using Professor Banz’s methods. S & P 500 Index: The S&P Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock’s weight in the Index proportionate to its market value. The “500” is one of the most widely used benchmarks of US equity performance. S&P BARRA Growth and Value Indices: Companies in each US index are split into two groups based on price-to-book ratio to create growth and value indices. The Value index contains companies with lower price-to-book ratios, while the Growth index contains those with higher ratios. T-Bills: For the U.S. Treasury Bill Index, data from the “Wall Street Journal” are used form ; the CRSP U.S. Government Bond File is the source until Each month, a one-bill portfolio containing the shortest-term bill having not less than one month to maturity is constructed. To measure holding period returns for the one-bill portfolio, the bill is priced as of the last trading day of the current month Source: Ibbotson Associates, Chicago Revised 02/04
Disclosures
Government bonds and Treasury bills are guaranteed by the US Gov’t and, if held to maturity, as with all bonds offer a fixed rate of return and principal.
Stocks are not guaranteed, represent ownership in a company and offer long term growth potential but may fluctuate more and provide less current income than other investments.
Standard deviation represents the amount, over a period of time, that a portfolio’s return deviates from the mean or average annual return that the portfolio has Experienced.
The price of small company stocks generally are more volatile than those of large company stocks.
Managed Accounts Consulting Group Is affiliated with Prudential Investments LLC.