Downturns and Recoveries

1. Downturns and Recoveries

2. 355.1% 279.6% 108.4% 87.0% 86.0% 71.5% 62.6% –15.4% –14.7% –16.5% –14.3% –29.6% –42.6% –40.1% –44.7% 1973 1978 1983 1988 1993 1998 2003 2008 Stock Market Contractions and Expansions1973–2008 $100 • Contraction • Expansion • Stocks 10 1 0 400% 200 0 –200 • 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

3. Sep 1929–Jun 1932 Jul 1932–Jan 1945 Jun 1946–Nov 1946 Dec 1946–Oct 1949 Aug 1956–Feb 1957 Mar 1957–Jul 1957 Aug 1957–Dec 1957 Jan 1958–Jul 1958 Jan 1962–Jun 1962 Jul 1962–Apr 1963 Feb 1966–Sep 1966 Oct 1966–Mar 1967 Dec 1968–Jun 1970 Jul 1970–Mar 1971 Jan 1973–Sep 1974 Oct 1974–Jun 1976 Jan 1977–Feb 1978 Mar 1978–Jul 1978 Dec 1980–Jul 1982 Aug 1982–Oct 1982 Sep 1987–Nov 1987 Dec 1987–May 1989 Jun 1990–Oct 1990 Nov 1990–Feb 1991 Jul 1998–Aug 1998 Sep 1998–Nov 1998 Sep 2000–Sep 2002 Oct 2002–Oct 2006 *Nov 2007–Dec 2008 TBD Market Downturns and Recoveries1926–2008 Downturn % Loss Recovery 34 months –83.4% 1 51 months 6 months –21.8% 35 months 7 months –10.2% 5 months 5 months –15.0% 7 months 6 months –22.3% 1 0 months 8 months –15.6% 6 months 19 months –29.3% 9 months 21 months –42.6% 21 months 14 months –14.3% 5 months 20 months –16.5% 3 months 3 months –29.6% 1 8 months 5 months –14.7% 4 months 2 months –15.4% 3 months 25 months –44.7% 49 months 14 months –40.1% TBD • Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. *The exact length of the downturn has yet to be determined. An investment cannot be made directly in an index. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009

4. Periods of Consecutive Negative Stock Returns1926–2008 60% Return Average stock market return from 19262008 was 9.6% 54% 50 40 37% 30 29% 20% 20 10 0 –0.4% –8% –8% –9% –10% –12% –12% –15% –10 –22% –25% –20 –26% –30 –43% –40 –50 1929 1930 1931 1932 1933 1939 1940 1941 1942 1973 1974 1975 2000 2001 2002 2003 • 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

5. 2008 2001 1990 1982 1980 1974 1970 1960 1958 1954 1949 1946 1956 1966 1976 1986 1996 2006 Stock Performance During Recessions1946–2008 $1 ,000 Shaded regions denote economic recessions 1 00 10 1 0.10 • Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of 1946. 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

6. Stock Performance After Recessions1946–2008 80% Return 74.0% 70 60 • Small stocks • Large stocks 50 47.7% 40 33.7% 30 20 20.1% 19.1% 11.4% 10 2.2% 3.8% 0 After 1 month After 6 months After 1 year After 3 years • Past performance is no guarantee of future results. Cumulative returns of large and small stocks after recessions 1946–2008. Note: The recession that began in Dec 2007 is still occurring and is not included in the analysis. 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

7. 20% 15 10 6.69% 6.25% Average: 5.69% 5.62% 5 0 1-yr government IT government LT government Federal yield yield yield funds History of Interest RatesJuly 1954–December 2008 Current • 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 2008. 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

8. 1946 1956 1966 1976 1986 1996 2006 Bond Yields During Recessions 1946–2008 18% Yield 16 • Short-term govt bonds (4/53–12/08) • Long-term govt bonds 14 12 Shaded regions denote economic recessions 10 8 6 4 3.03% 2 0.49% 0 • 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

9. Monetary period Period length* Entire period average = 10.3% Jul 71–Oct 71 3 months Nov 71–Dec 72 13 months Jan 73–Nov 74 22 months Dec 74–Jul 77 31 months Aug 77–Apr 80 32 months May 80–Aug 80 3 months Sep 80–Oct 81 13 months Nov 81–Mar 84 28 months Apr 84–Oct 84 6 months Nov 84–Aug 87 33 months Sep 87–Nov 90 38 months Dec 90–Apr 94 40 months May 94–Dec 95 19 months Jan 96–Jul 99 42 months Aug 99–Dec 00 16 months Jan 01–Jun 04 41 months Jul 04–Jul 07 36 months Aug 07–Dec 08 16 months Average return –30 –20 –10 0% 10 20 30 40 Stock Returns and Monetary PolicyAnnualized monthly returns, July 1971–December 2008 • Restrictive • Expansive –1.9% 24.5% –21.6% 19.6% 10.1% 44.5% 3.5% 16.0% 13.7% 30.5% 5.7% 12.9% 22.1% 24.3% 2.5% –2.2% 11.4% –32.0% • Past performance is no guarantee of future results. *Period length and calculation exclude the month of initial change in policy to measure “pure” monetary policy environment. 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

10. U.S. Market Recovery After TragedyCumulative return of stocks after tragic events 81.4% 80% • After 1 month • After 6 months • After 1 year • After 3 years 60 57.8% 56.7% 40 26.9% 20.3% 20 15.9% 12.6% 11.0% 8.3% 2.1% 1.9% 1.6% 6.1% 0 –4.9% –1.0% –20.5% –20 Dec 7, 1941:Pearl Harbor Aug 2, 1990:Iraq invades Kuwait Feb 26, 1993:World Trade Center bombed Sep 11, 2001:Terrorist attack • Past performance is no guarantee of future results. Returns reflect the percentage change in the index level from the end of the month that the event occurred to one month, six months, one year, and three years after. 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. Portfolio 100% stocks U.S. Market Recovery After Financial CrisesCumulative return of all-stock portfolio after various events 97.1% • After 1 month • After 6 months • After 1 year • After 3 years • After 5 years 100% Return 80 58.1% 60 40.1% 34.3% 40 30.1% 27.8% 27.3% 14.8% 20 12.6% 11.0% 8.1% 6.2% 5.5% 5.1% 1.9% –0.4% 0 –3.0% –4.0% –5.0% –3.6% –8.2% –14.8% –20.5% –20 –21.7% –40.9% –40 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 • 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. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009

12. Portfolio 40% bonds 60% stocks U.S. Market Recovery After Financial CrisesCumulative return of balanced portfolio after various events • After 1 month • After 6 months • After 1 year • After 3 years • After 5 years 100% Return 90.1% 80 59.2% 60 42.3% 34.6% 34.3% 40 20.3% 19.6% 14.3% 13.2% 20 12.3% 11.3% 10.3% 5.0% 5.2% 4.0% 3.0% –0.2% 0 –0.7% –2.3% –2.0% –2.1% –4.8% –7.1% –8.9% –15.3% –20 –40 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 • 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. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009