1. © 2014 Morningstar. All Rights Reserved. The images contained in the Presentations and Education modules are provided as a single user license (‘Authorized User’). Images may be used in seminars and client presentations by the Authorized User, but may not be distributed electronically or without written permission from Morningstar. Printed handouts of the images may be used with individual clients and prospects, but may not be mass distributed. For additional user licenses or distribution capabilities, please contact your Morningstar sales representative. Downturns and Recoveries

2. Stock Market Contractions and Expansions 1973–2013 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. © 2014 Morningstar. All Rights Reserved. 1 10 $100 2009200319971991198519791973 –200 0 200 400% 0 Contraction Expansion Stocks 355.1% $55.1 –14.3%–16.5% –29.6% –14.7%–15.4% –44.7% –50.9% 87.0% 279.6% 71.5% 62.6% 108.4% 110.7% 86.0% 178.9% –42.6%

3. Market Downturns and Recoveries 1926–2013 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. Downturns are defined by a time period when the stock market value declined by 10% or more from its peak. © 2014 Morningstar. All Rights Reserved. –83.4% –21.8% –10.2% –15.0% –22.3% –15.6% –29.3% –42.6% –14.3% –16.5% –29.6% –14.7% –15.4% –44.7% % Loss –50.9% 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 Downturn 16 months 151 months 35 months 5 months 7 months 10 months 6 months 9 months 21 months 5 months 3 months 18 months 4 months 49 months 37 months 3 months Recovery Mar 2009–Mar 2012Nov 2007–Feb 2009 Sep 1929–Jun 1932Jul 1932–Jan 1945 Jun 1946–Nov 1946Dec 1946–Oct 1949 Aug 1956–Feb 1957Mar 1957–Jul 1957 Aug 1957–Dec 1957Jan 1958–Jul 1958 Jan 1962–Jun 1962Jul 1962–Apr 1963 Feb 1966–Sep 1966Oct 1966–Mar 1967 Dec 1968–Jun 1970Jul 1970–Mar 1971 Jan 1973–Sep 1974Oct 1974–Jun 1976 Jan 1977–Feb 1978Mar 1978–Jul 1978 Dec 1980–Jul 1982Aug 1982–Oct 1982 Sep 1987–Nov 1987Dec 1987–May 1989 Jun 1990–Oct 1990Nov 1990–Feb 1991 Jul 1998–Aug 1998Sep 1998–Nov 1998 Sep 2000–Sep 2002Oct 2002–Oct 2006

4. Periods of Consecutive Negative Stock Returns 1926–2013 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. © 2014 Morningstar. All Rights Reserved. 20% 37% 29% –12% –0.4% –10% –26% –15% –9% –12% –22% Compound annual stock market return from 1926  2013 was 10.1% –50 –40 –30 –20 –10 0 10 20 30 40 50 60% Return 19391940194119422000200120022003197319741975 54% –25% –8% –43% –8% 19291930193119321933

5. 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. Four market crises defined as a drop of 25% or more in the Standard & Poor’s 500 ® index. © 2014 Morningstar. All Rights Reserved. 0.1 10 1 $100 Oil crisis Crises and Long-Term Performance Market declines in historical context, Jan. 1970–Dec. 2013 Stock market crash The dot-com crash Banking and credit crisis Compound annual return 10.4% $77.87 197019751980198519952000200519902010 0.50 $1 73747576 0.50 $1 878889070809111012 0.50 $1 0.50 $1 00010203040506

6. Stock Performance After Recessions 1953–2013 Past performance is no guarantee of future results. Cumulative returns of large and small stocks after recessions 1953–2013. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2014 Morningstar. All Rights Reserved. 2.8% 11.9% After 3 yearsAfter 1 yearAfter 6 monthsAfter 1 month 0 10 20 30 40 50 60 70 80% Return Small stocks Large stocks 17.4% 32.9% 44.7% 75.3% 4.8% 20.4%

7. The Importance of Staying Invested Ending wealth values after a market decline 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. © 2014 Morningstar. All Rights Reserved. 50 70 90 110 $150k $151,671 $54,560 $98,818 Stay invested in stock market Exit market and reinvest after 1 year Exit market and invest in cash Recession (Dec 2007–Jun 2009) Jan 07Jan 08Jan 09Jan 10Jan 11Jan 12Jan 13 130

8. History of Interest Rates July 1954–December 2013 Past performance is no guarantee of future results. Each bar shows the range of yield for each bond over the time period July 1954 to December 2013. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2014 Morningstar. All Rights Reserved. Current 5.16% 6.41% 0 5 10 15 20% Federal funds LT government yield IT government yield 1-yr government yield 5.83% Average: 5.23%

9. 0 2 4 6 8 10 12 14 16 18% Yield 1996200619861976196619561946 Bond Yields During Recessions 1946–2013 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. © 2014 Morningstar. All Rights Reserved. 0.13% 3.67% Shaded regions denote economic recessions Short-term govt bonds (4/53–12/13) Long-term govt bonds

10. Stock Returns and Monetary Policy Annual returns, 1955–2013 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. © 2014 Morningstar. All Rights Reserved. –40 –30 –20 –10 0 10 20 30 40% Return 199019952000200519851960195519651975198019702010 Effective fed funds rate Annual stock returns Average return = 10.3% Gray shaded regions denote economic recessions

11. Correlations of Various Asset Classes with the Market January 1980–December 2013 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. © 2014 Morningstar. All Rights Reserved. Small stocks International stocks Commodities REITs Gold Long-term corp bonds Long-term govt bonds Intermediate-term govt bonds Treasury bills 0.72 0.57 0.08 0.47 0.05 0.23 0.18 0.12 –0.01 0.95 0.93 0.51 0.83 –0.06 0.34 0.03 –0.32 –0.15 0.77 0.66 0.21 0.57 0.05 0.20 0.07 0.06 0.01 Low Medium High Before recession Jan 1980–Nov 2007 During recession Dec 2007–Jun 2009 Entire period Jan 1980–Dec 2013

12. U.S. Market Recovery After Financial Crises Cumulative return of all-stock portfolio after various events Past performance is no guarantee of future results. Returns reflect the percentage change in the index level from the end of the month in which the event occurred to one month, six months, one year, three years and five years after. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2014 Morningstar. All Rights Reserved. 40 20 0 –40 100% Return 80 60 October 1987: Stock market crash August 1989: U.S. savings and loan crisis September 1998: Long-Term Capital Management’s bailout March 2000: The dot-com crash September 2001: Terrorist attack October 2008: Banking and credit crisis –8.2% 5.5% 14.8% 34.3% 97.1% –0.4% –4.0%–5.0% 30.1% 58.1% 8.1% 27.3% 27.8% 6.2% 5.1% –3.0% –3.6% –21.7% –40.9% –14.8% 40.1% 1.9% 11.0% –20.5% 12.6% –7.2% –8.5% 9.8% 38.3% –20 Portfolio 100% stocks After 1 month After 6 months After 1 year After 3 years After 5 years 102.6%

13. 40 20 0 –20 100% Return 80 60 October 1987: Stock market crash August 1989: U.S. savings and loan crisis September 1998: Long-Term Capital Management’s bailout March 2000: The dot-com crash September 2001: Terrorist attack October 2008: Banking and credit crisis –4.8% 5.2% 14.3% 34.3% 90.1% –0.2% –2.0% –2.3% 34.6% 59.2% 4.0% 13.2% 12.3% 11.3% 20.3% –2.1% –0.7% –8.9% –15.3% 10.3% 42.3% 3.0% 5.0% –7.1% 19.6% 1.5% –0.4% 44.2% U.S. Market Recovery After Financial Crises Cumulative return of balanced portfolio after various events Past performance is no guarantee of future results. Returns reflect the percentage change in the index level from the end of the month in which the event occurred to one month, six months, one year, three years and five years after. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2014 Morningstar. All Rights Reserved. Portfolio 60% stocks 40% bonds After 1 month After 6 months After 1 year After 3 years After 5 years 11.7% 83.4%