1. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 LCN200803-2013997 Principles of Investing

2. Power of Reinvesting 1988–2007 Past performance is no guarantee of future results. Hypothetical value of $1,000 invested at the beginning of 1988. Data does not account for taxes or transaction costs. 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 $20k 1 1988199119941997200020032006 $9,330 $5,943 $5,892 $1,638 10 11.8% 9.3 2.5 Compound annual return Stocks with reinvestment Stocks without reinvestment Bonds with reinvestment Bonds without reinvestment

3. Power of Compounding Hypothetical investment in stocks 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. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 Years contributing:10 Annual amount contributed:$2,000 Years contributing:10 Annual amount contributed:$4,000 Investor BInvestor A $40,000 $55,138 $20,000 $104,555 Total amount invested Compounded value at year-end 2007 0 20 40 60 80 100 120 $140k 1988–20071998–2007

4. Importance of Rebalancing 1987–2007 Past performance is no guarantee of future results. Stocks: 50% large and 50% small stocks. Data is represented as of year-end 1987.Bonds: intermediate-term government bonds. 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 50% 55% 45% 69% 31% 62% 38% 73% 27% 0 10 20 30 40 50 60 70 80% 20022007199719921987 Stock allocation Bond allocation

5. Controlling Risk With Portfolio Rebalancing The risk and return of rebalanced versus non-rebalanced portfolios Past performance is no guarantee of future results. Risk and return are measured by annualized 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. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 Return 0 2 4 6 8 10 12 14% Jan 1970– Dec 2007 Jan 1980– Dec 2007 Jan 1990– Dec 2007 Jan 1970– Dec 2007 Jan 1980– Dec 2007 Jan 1990– Dec 2007 Risk 12.6% 12.4% 10.7% 10.2% 9.8% 9.0% 11.0% 11.7% 9.1% 10.7% 11.3% 8.8% Non-rebalanced portfolio Rebalanced portfolio

6. 2,500 Dangers of Market Timing Hypothetical value of $1 invested from 1926–2007 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. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 $3,246 $19.23$20.19 0 500 1,000 1,500 2,000 3,000 $3,500 Stocks Stocks minus best 40 months Treasury bills

7. Dangers of Market Timing Hypothetical value of $1 invested from 1988–2007 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. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 $9.33 $2.36 $2.41 0 2 4 6 8 $10 StocksStocks minus best 18 monthsTreasury bills

8. Market-Timing Risk The effects of missing the best month of annual returns 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. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 –40 –30 –20 –10 0 10 20 30 40% Return 1988199420002006198219761970 Annual return Annual return minus best month

9. Reduction of Risk Over Time 1926–2007 Past performance is no guarantee of future results. Each bar shows the range of compound annual returns for each asset class over the period 1926–2007. 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 stocksLarge stocksGovernment bondsTreasury bills –60 –30 0 30 60 90 120 150% 1-year Holding period 5-year20-year1-year5-year20-year1-year5-year20-year1-year5-year20-year Compound annual return: 12.5% 10.4% 5.5% 3.7%

10. Tax-Loss Harvesting Selling losing investments for a tax advantage Past performance is no guarantee of future results. *Assumes capital gains tax rate of 15%.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 Taxable gain (loss) Taxes paid (credit)* $5,000 $750 ($450) ($3,000) $2,000 $300 (3,500) (2,500) (1,500) (500) 500 1,500 2,500 3,500 4,500 $5,500 Investment with gain Investment with loss Results of harvesting loss

11. Returns Before and After Inflation 1926–2007 Past performance is no guarantee of future results. 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 10.4% 7.1% 5.5% 2.4% 3.7% 0.7% StocksBondsCash 0 2 4 6 8 10 12% Before inflationAfter inflationBefore inflationAfter inflationBefore inflationAfter inflation

12. Reduction of Portfolio Risk Past performance is no guarantee of future results. Risk is measured by standard deviation. 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 0 2 4 6 8 10 12 14% Risk 12345678 Number of randomly selected assets in portfolio 12.1% 10.0% 8.9% 8.4% 8.0% 7.9% 7.7% 7.5%

13. Can You Stay on Track? 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. © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 $18,439 $1,091 $37,344 $912 $60,895 $747 600 800 1,000 $1,200 100 1k 10k $100k 1975198519952005197219731974 Stocks 50/50 portfolio Bonds