1. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 Stocks and Bonds

2. Investing in Stocks © 2009 Morningstar, Inc. All rights reserved. 3/1/2009  Ownership in a corporation  Voting rights  Historically higher returns  More risk

3. Stock Market Performance 1926–2008 Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of 1926. 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. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 11.7% 9.6 Compound annual return $100k 10k 1k 100 10 1 0.10 199620061986197619661956194619361926 $9,549 $2,049 Small stocks Large stocks

4. Small Stock Annual Returns Relative to Large Stocks 1926–2008 Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 -60 -40 -20 0 20 40 60 80 100% Excess return 199620061986197619661956194619361926 Small stocks outperform large stocks Large stocks outperform small stocks

5. –20 –10 0 10 20 30 40 50% 1996 1998 2003 2005 1961 1963 1968 1970 1975 1977 1982 1984 1989 1991 1926 1928 1933 1935 1940 1942 1947 1949 1954 1956 Small and Large Stock Performance Tends to Go in Cycles 36-month rolling period returns 1926–2008 Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 Small stock excess return Jan Dec

6. Risk of Stock Market Loss Over Time 1926–2008 Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 One-year returns 5-year annualized returns 15-year annualized returns Each bar represents the average return for the preceding 5-year time period. Each bar represents the average return for the preceding 15-year time period. 50% 0 0 0 192619361946195619661976198619962006 Periods with gain Periods with loss 86% 14% 100% 29% 71%

7. Stock Diversification Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 1 2 4 6 81630501001000 Risk Company risk Market risk Number of stocks in portfolio

8. Benefits of Bonds in a Portfolio © 2009 Morningstar, Inc. All rights reserved. 3/1/2009  Potential growth  Historically lower risk  Diversification benefits  Income generation  Expand efficient opportunities

9. Bond Market Performance 1926–2008 Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of 1926. 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. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 $20.53 $29.69 $99.16 $115.15 $157.44 $2,049.45 $10,000 1,000 100 10 1 0.10 9.6% 6.3 5.9 5.7 4.2 3.7 Compound annual return Stocks High-yield corp bonds Corporate bonds Government bonds Municipal bonds Treasury bills 192619361946195619661976198619962006

10. Relationship Between Bond Prices and Yields When yields increase, bond prices decrease Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 2 4 6 8 10 12 14 16% 0 0.20 0.40 0.60 0.80 1.00 1.20 1.40 $1.60 199620061986197619661956194619361926 Bond prices ($) Bond yields (%)

11. Bonds Produced Greater Income 1970–2008 Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 StocksBonds Capital appreciation Income 30% 68% 2% 76% 19% 5% Reinvestment of income

12. Bonds Expand Efficient Opportunities 1970–2008 Past performance is no guarantee of future results. Risk is measured by standard deviation. Risk and return are based on annual data over the period 1970–2008. Portfolios presented are based on modern portfolio theory. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 5% Risk791113 15 1719212325 15% Return 14 13 12 11 10 9 8 Stock portfolios Stock and bond portfolios Small stocks Large stocks Bonds

13. Adding a Bond Allocation to Diversify 1970–2008 Past performance is no guarantee of future results. Risk is measured by standard deviation. Risk and return are based on annual data over the period 1970–2008. Portfolios presented are based on modern portfolio theory. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 45% 50% 5% Return9.5% Risk9.1% Lower risk portfolio 30% 70% Return9.5% Risk12.9% Original portfolio Stocks Bonds Cash

14. Risk Versus Return Stocks, bonds, and bills 1926–2008 Past performance is no guarantee of future results. Risk and return are measured by standard deviation and compound annual return, respectively. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 14% Return 12 10 8 6 4 2 0 0% Risk5101520253035 Small stocks Large stocks Treasury bills Long-term government bonds Intermediate-term government bonds

15. 2007 11.6 9.9 5.5 4.7 –5.2 1994199519961997199819992000200120022003200420052006 8.1%37.623.033.428.629.821.522.817.860.720.714.026.9 3.934.517.622.820.327.35.93.81.639.218.47.816.2 3.131.76.415.913.121.0–3.63.7–13.328.710.95.715.8 1.311.65.25.34.94.7–9.1–11.9–15.71.48.54.94.8 –7.85.6–0.92.1–7.3–9.0–14.0–21.2–22.11.01.23.01.2 Asset-Class Winners and Losers Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009 Highest return Lowest return Small stocks Large stocks International stocks Long-term government bonds Treasury bills 2008 25.9 1.6 –36.7 –37.0 –43.1