© 2008 Morningstar, Inc. All rights reserved. 3/1/2008 LCN Portfolio Performance

What is Asset Allocation? © 2008 Morningstar, Inc. All rights reserved. 3/1/2008 Asset allocation is the process of combining asset classes such as stocks, bonds, and cash in a portfolio in order to meet your goals. Stocks Bonds Cash

Long-Term Portfolio Performance 1926–2007 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/ % Compound annual return $10,000 1, $3,246 $1,655 $698 $245 $71 Portfolio 1 (100% Stocks) Portfolio 2 (75% Stocks, 25% Bonds) Portfolio 3 (50% Stocks, 50% Bonds) Portfolio 4 (25% Stocks, 75% Bonds) Portfolio 5 (100% Bonds)

$9.33 $7.83 $6.40 $5.11 $3.97 $ Year Portfolio Performance 1988–2007 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/ % Compound annual return Portfolio 1 (100% Stocks) Portfolio 2 (75% Stocks, 25% Bonds) Portfolio 3 (50% Stocks, 50% Bonds) Portfolio 4 (25% Stocks, 75% Bonds) Portfolio 5 (100% Bonds)

Portfolio Summary Statistics Rolling periods 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/ % 118.7% 77.8% 40.9% 32.7% –67.6% –55.7% –40.7% –22.0% –5.6% 25.5% 23.1% 18.7% 11.0% 8.5% 36.1% 29.0% 22.2% 20.0% 19.5% –17.4% –11.5% –6.1% –1.2% 0.7% 12.3% 7.7% 5.1% 0.3% 0.0% 21.4% 17.8% 16.2% 14.9% 13.7% –4.9% –1.3% 1.5% 3.3% 1.2% 3.4% 0.6% 0.0% 10.4% 9.5% 8.3% 6.9% 5.3% Highest return Average return Lowest return Negative periods Highest return Lowest return Negative periods Highest return Lowest return Negative periods 12-month holding period60-month120-month 50% Stocks Bonds 100% 25%75% 25% 100%

Diversification May Lessen the Impact of Market Swings 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/ % – – –2.0– – –3.9–6.9– – –1.8–9.1–11.9– Highest return Lowest return (100% Stocks)(75% Stocks, 25% Bonds)(25% Stocks, 75% Bonds)(100% Bonds)(50% Stocks, 50% Bonds) Portfolio 1 Portfolio 2 Portfolio 4 Portfolio 5 Portfolio 3 8.0

Portfolio Risk Appears to Diminish Over Time 1926–2007 Past performance is no guarantee of future results. Each bar shows the range of rolling 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 –100 – % 75% Stocks/25% Bonds50% Stocks/50% Bonds25% Stocks/75% Bonds100% Bonds100% Stocks 10.4% 9.5% 8.3% 6.9% 5.3% 12-month holding periods 60-month holding periods 120-month holding periods return Compound annual

Stocks and Bonds: Risk Versus Return 1970–2007 Past performance is no guarantee of future results. Risk and return are measured by standard deviation and arithmetic mean, 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/ % Return % Risk Maximum risk portfolio: 100% Stocks 80% Stocks, 20% Bonds 60% Stocks, 40% Bonds 50% Stocks, 50% Bonds 100% Bonds Minimum risk portfolio: 25% Stocks, 75% Bonds

Discussion of Simulation Criteria and Methodology © 2008 Morningstar, Inc. All rights reserved. 3/1/2008  Many of the following images were created using parametric simulation. This model estimates the range of possible outcomes based on a set of assumptions including arithmetic mean (return), standard deviation (risk), and correlation for a set of asset classes. The inputs used herein are the historical 1926–2007 figures. The risk and return of each asset class, cross-correlation, and annual average inflation over this time period follow. Stocks: risk 20.0%, return 12.3%; Bonds: risk 5.7%, return 5.5%; Correlation 0.04; Inflation: return 3.1%.  Note that other investments not considered may have characteristics similar or superior to those being analyzed. Each simulation produces 35 randomly selected return estimates consistent with the characteristics of the portfolio to estimate the return distribution over a 35-year period. Each simulation is run 5,000 times, to give 5,000 possible 35-year scenarios. A limitation of the simulation model is that it assumes that the distribution of returns is normal. Should actual returns not follow this pattern, results may vary.

Interpreting Confidence Levels in Simulation This table is intended to help interpret 50%, 75%, and 90% confidence levels illustrated in the following images. © 2008 Morningstar, Inc. All rights reserved. 3/1/ % 75% 90% (More conservative) 50% 75% 90% 25% 10% 50% Confidence levelChance of exceeding Chance of falling short

65 years old Simulated Portfolio Performance 50% confidence level IMPORTANT: Projections generated by Morningstar regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary over time and with each simulation. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2008 Morningstar, Inc. 3/1/2008 Portfolio 1 (100% Stocks) Portfolio 2 (75% Stocks, 25% Bonds) Portfolio 3 (50% Stocks, 50% Bonds) Portfolio 4 (25% Stocks, 75% Bonds) Portfolio 5 (100% Bonds) $1 mil 500k

Simulated Portfolio Performance 75% confidence level IMPORTANT: Projections generated by Morningstar regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary over time and with each simulation. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2008 Morningstar, Inc. 3/1/2008 $1 mil 500k years old Portfolio 1 (100% Stocks) Portfolio 2 (75% Stocks, 25% Bonds) Portfolio 3 (50% Stocks, 50% Bonds) Portfolio 4 (25% Stocks, 75% Bonds) Portfolio 5 (100% Bonds)

Simulated Portfolio Performance 90% confidence level IMPORTANT: Projections generated by Morningstar regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary over time and with each simulation. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2008 Morningstar, Inc. 3/1/2008 $1 mil 500k years old Portfolio 1 (100% Stocks) Portfolio 2 (75% Stocks, 25% Bonds) Portfolio 3 (50% Stocks, 50% Bonds) Portfolio 4 (25% Stocks, 75% Bonds) Portfolio 5 (100% Bonds)