Investment Options for 2015

Presented by Laurence T. Hanslits, CFP

500 Liberty Street SESuite 310

Salem, OR 97301(503) 371-3333

larryh@thehgroup.comthehgroup-salem.com

Investment Options for 2015

•CD’s•Savings/Money Market/Checking•Bonds•Stocks•Real Estate•Commodities (Gold)

What are the Advantages?

•CD’s•Savings/Money Market/Checking•Bonds•Stocks•Real Estate•Commodities (Gold)

What are the Dangers?

•CD’s•Savings/Money Market/Checking•Bonds•Stocks•Real Estate•Commodities (Gold)

WHAT ASSET CLASS IS BEST?

Conservative Asset Class (T-Bills) Asset class returns sorted top to bottom, best to worst

Disclosures. Assets are represented by the following indices: Large-Cap Stocks - Standard & Poor's 500; Mid-Cap Stocks - Russell MidCap; Small-Cap Stocks - Russell 2000; Foreign Stocks - MSCI-EAFE (in U.S. $); Foreign Bonds - Citi Non-$ World Government Bond; Corporate Bonds - Barclays Capital Credit; U.S. Gov't Bonds - Barclays Capital Government; Treasury Bills - Citi 3-Month Treasury; Real Estate - Dow Jones Wilshire REIT; Commodities - S&P GSCI; Inflation - Annual change in the Consumer Price Index for Urban Consumers (CPI-U), as calculated by the U.S. Bureau of Labor Statistics. Index performance is provided as a benchmark but is not illustrative of any particular investment. An investment cannot be made in an index. Market indexes do not include expenses, which are deducted from fund returns. Sources: Morningstar, U.S. Bureau of Labor Statistics. The performance data shown represents past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Large-Cap Real Large-Cap Large-Cap Real Small-Cap Real Real U.S. Gov't Mid-Cap Real Real Real Small-Cap Real

Stocks Estate Stocks Stocks Commodities Commodities Estate Commodities Stocks Estate Commodities Estate Commodities Bonds Stocks Estate Estate Estate Stocks Estate

37.53% 37.04% 33.35% 28.58% 40.92% 49.74% 12.36% 32.07% 47.25% 33.14% 25.55% 35.99% 32.67% 12.39% 40.47% 28.60% 9.24% 17.59% 38.82% 31.78%

Mid-Cap Mid-Cap Foreign Foreign Real Corporate Foreign Mid-Cap Foreign Real Foreign Foreign Foreign Foreign Small-Cap U.S. Gov't Foreign Mid-Cap Large-Cap

Stocks Commodities Stocks Stocks Stocks Estate Bonds Bonds Stocks Stocks Estate Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Stocks

34.45% 33.92% 29.02% 19.93% 27.03% 31.04% 10.40% 21.99% 40.08% 20.25% 13.82% 26.36% 11.47% 10.10% 31.78% 26.85% 9.01% 17.32% 34.76% 13.69%

Small-Cap Large-Cap Small-Cap Foreign Small-Cap U.S. Gov't U.S. Gov't U.S. Gov't Foreign Mid-Cap Foreign Small-Cap Foreign Treasury Real Mid-Cap Corporate Mid-Cap Large-Cap Mid-Cap

Stocks Stocks Stocks Bonds Stocks Bonds Bonds Bonds Stocks Stocks Stocks Stocks Stocks Bills Estate Stocks Bonds Stocks Stocks Stocks

28.46% 22.95% 22.37% 17.79% 21.26% 13.24% 7.23% 11.50% 38.59% 20.23% 13.54% 18.35% 11.18% 2.08% 28.61% 25.49% 8.35% 17.26% 32.39% 13.22%

Corporate Mid-Cap Real Mid-Cap Large-Cap Corporate Treasury Corporate Real Small-Cap Mid-Cap Large-Cap U.S. Gov't Corporate Small-Cap Large-Cap Foreign Small-Cap Foreign Corporate

Bonds Stocks Estate Stocks Stocks Bonds Bills Bonds Estate Stocks Stocks Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Bonds

22.25% 19.00% 19.66% 10.09% 21.04% 9.39% 3.67% 10.52% 36.18% 18.32% 12.65% 15.80% 8.66% -3.08% 27.19% 15.05% 5.17% 16.35% 22.78% 7.53%

Small-Cap Corporate U.S. Gov't Mid-Cap Mid-Cap Small-Cap Real Large-Cap Large-Cap Mid-Cap Mid-Cap Small-Cap Large-Cap Large-Cap Large-Cap Real U.S. Gov't

Commodities Stocks Bonds Bonds Stocks Stocks Stocks Estate Stocks Commodities Stocks Stocks Stocks Stocks Stocks Commodities Stocks Stocks Estate Bonds

20.33% 16.51% 10.23% 9.85% 18.23% 8.26% 2.49% 3.60% 28.67% 17.28% 4.91% 15.27% 5.59% -33.80% 26.45% 9.02% 2.12% 15.98% 1.86% 4.92%

Foreign Foreign U.S. Gov't Corporate Treasury Treasury Foreign Treasury Foreign Small-Cap Foreign Large-Cap Large-Cap Corporate Corporate Treasury Corporate Treasury Small-Cap

Bonds Stocks Bonds Bonds Bills Bills Bonds Bills Commodities Bonds Stocks Bonds Stocks Stocks Bonds Bonds Bills Bonds Bills Stocks

19.55% 6.05% 9.59% 8.57% 4.87% 6.31% -3.55% 1.68% 20.72% 12.13% 4.56% 6.97% 5.50% -37.00% 16.05% 8.24% 0.06% 9.39% 0.10% 4.89%

U.S. Gov't Treasury Treasury Treasury Corporate Foreign Mid-Cap Foreign Foreign Large-Cap Treasury Treasury Corporate Real Foreign U.S. Gov't Treasury

Bonds Bills Bills Bills Bonds Bonds Stocks Stocks Bonds Stocks Bills Bills Bonds Estate Commodities Stocks Commodities Bonds Commodities Bills

18.34% 5.26% 5.32% 5.01% -1.96% -2.64% -5.63% -15.94% 18.53% 10.88% 3.34% 5.05% 5.11% -39.20% 13.48% 7.76% -1.18% 2.01% -1.22% 0.03%

Real Foreign Foreign Small-Cap Real Small-Cap Large-Cap Mid-Cap Corporate Corporate U.S. Gov't Corporate Treasury Mid-Cap Foreign U.S. Gov't Mid-Cap Foreign Corporate Foreign

Estate Bonds Stocks Stocks Estate Stocks Stocks Stocks Bonds Bonds Bonds Bonds Bills Stocks Bonds Bonds Stocks Bonds Bonds Bonds

12.24% 4.09% 1.78% -2.56% -2.57% -3.03% -11.88% -16.19% 7.70% 5.24% 2.65% 4.26% 4.99% -41.46% 4.37% 5.53% -1.73% 1.50% -2.01% -2.68%

Foreign Corporate Foreign Real U.S. Gov't Large-Cap Foreign Small-Cap U.S. Gov't U.S. Gov't Corporate U.S. Gov't Small-Cap Foreign Treasury Foreign Small-Cap Treasury U.S. Gov't Foreign

Stocks Bonds Bonds Estate Bonds Stocks Stocks Stocks Bonds Bonds Bonds Bonds Stocks Stocks Bills Bonds Stocks Bills Bonds Stocks

11.21% 3.28% -4.26% -17.00% -2.23% -9.10% -21.43% -20.48% 2.36% 3.48% 1.96% 3.48% -1.55% -43.39% 0.24% 5.21% -4.17% 0.11% -2.61% -4.90%

Treasury U.S. Gov't Foreign Foreign Large-Cap Treasury Treasury Foreign Real U.S. Gov't Treasury Foreign Foreign

Bills Bonds Commodities Commodities Bonds Stocks Commodities Stocks Bills Bills Bonds Commodities Estate Commodities Bonds Bills Stocks Commodities Bonds Commodities

5.79% 2.77% -14.07% -35.75% -5.08% -14.19% -31.93% -22.09% 1.05% 1.43% -9.20% -15.10% -17.56% -46.49% -2.19% 0.13% -12.13% 0.06% -4.00% -33.06%

Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation(CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI)2.5% 3.3% 1.7% 1.6% 2.7% 3.4% 1.6% 2.4% 1.9% 3.3% 3.4% 2.5% 4.1% 0.1% 2.7% 1.5% 3.0% 1.7% 1.5% 0.8%

Volatile Asset Class (Commodities) Asset class returns sorted top to bottom, best to worst

Disclosures. Assets are represented by the following indices: Large-Cap Stocks - Standard & Poor's 500; Mid-Cap Stocks - Russell MidCap; Small-Cap Stocks - Russell 2000; Foreign Stocks - MSCI-EAFE (in U.S. $); Foreign Bonds - Citi Non-$ World Government Bond; Corporate Bonds - Barclays Capital Credit; U.S. Gov't Bonds - Barclays Capital Government; Treasury Bills - Citi 3-Month Treasury; Real Estate - Dow Jones Wilshire REIT; Commodities - S&P GSCI; Inflation - Annual change in the Consumer Price Index for Urban Consumers (CPI-U), as calculated by the U.S. Bureau of Labor Statistics. Index performance is provided as a benchmark but is not illustrative of any particular investment. An investment cannot be made in an index. Market indexes do not include expenses, which are deducted from fund returns. Sources: Morningstar, U.S. Bureau of Labor Statistics. The performance data shown represents past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Large-Cap Real Large-Cap Large-Cap Real Small-Cap Real Real U.S. Gov't Mid-Cap Real Real Real Small-Cap Real

Stocks Estate Stocks Stocks Commodities Commodities Estate Commodities Stocks Estate Commodities Estate Commodities Bonds Stocks Estate Estate Estate Stocks Estate

37.53% 37.04% 33.35% 28.58% 40.92% 49.74% 12.36% 32.07% 47.25% 33.14% 25.55% 35.99% 32.67% 12.39% 40.47% 28.60% 9.24% 17.59% 38.82% 31.78%

Mid-Cap Mid-Cap Foreign Foreign Real Corporate Foreign Mid-Cap Foreign Real Foreign Foreign Foreign Foreign Small-Cap U.S. Gov't Foreign Mid-Cap Large-Cap

Stocks Commodities Stocks Stocks Stocks Estate Bonds Bonds Stocks Stocks Estate Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Stocks

34.45% 33.92% 29.02% 19.93% 27.03% 31.04% 10.40% 21.99% 40.08% 20.25% 13.82% 26.36% 11.47% 10.10% 31.78% 26.85% 9.01% 17.32% 34.76% 13.69%

Small-Cap Large-Cap Small-Cap Foreign Small-Cap U.S. Gov't U.S. Gov't U.S. Gov't Foreign Mid-Cap Foreign Small-Cap Foreign Treasury Real Mid-Cap Corporate Mid-Cap Large-Cap Mid-Cap

Stocks Stocks Stocks Bonds Stocks Bonds Bonds Bonds Stocks Stocks Stocks Stocks Stocks Bills Estate Stocks Bonds Stocks Stocks Stocks

28.46% 22.95% 22.37% 17.79% 21.26% 13.24% 7.23% 11.50% 38.59% 20.23% 13.54% 18.35% 11.18% 2.08% 28.61% 25.49% 8.35% 17.26% 32.39% 13.22%

Corporate Mid-Cap Real Mid-Cap Large-Cap Corporate Treasury Corporate Real Small-Cap Mid-Cap Large-Cap U.S. Gov't Corporate Small-Cap Large-Cap Foreign Small-Cap Foreign Corporate

Bonds Stocks Estate Stocks Stocks Bonds Bills Bonds Estate Stocks Stocks Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Bonds

22.25% 19.00% 19.66% 10.09% 21.04% 9.39% 3.67% 10.52% 36.18% 18.32% 12.65% 15.80% 8.66% -3.08% 27.19% 15.05% 5.17% 16.35% 22.78% 7.53%

Small-Cap Corporate U.S. Gov't Mid-Cap Mid-Cap Small-Cap Real Large-Cap Large-Cap Mid-Cap Mid-Cap Small-Cap Large-Cap Large-Cap Large-Cap Real U.S. Gov't

Commodities Stocks Bonds Bonds Stocks Stocks Stocks Estate Stocks Commodities Stocks Stocks Stocks Stocks Stocks Commodities Stocks Stocks Estate Bonds

20.33% 16.51% 10.23% 9.85% 18.23% 8.26% 2.49% 3.60% 28.67% 17.28% 4.91% 15.27% 5.59% -33.80% 26.45% 9.02% 2.12% 15.98% 1.86% 4.92%

Foreign Foreign U.S. Gov't Corporate Treasury Treasury Foreign Treasury Foreign Small-Cap Foreign Large-Cap Large-Cap Corporate Corporate Treasury Corporate Treasury Small-Cap

Bonds Stocks Bonds Bonds Bills Bills Bonds Bills Commodities Bonds Stocks Bonds Stocks Stocks Bonds Bonds Bills Bonds Bills Stocks

19.55% 6.05% 9.59% 8.57% 4.87% 6.31% -3.55% 1.68% 20.72% 12.13% 4.56% 6.97% 5.50% -37.00% 16.05% 8.24% 0.06% 9.39% 0.10% 4.89%

U.S. Gov't Treasury Treasury Treasury Corporate Foreign Mid-Cap Foreign Foreign Large-Cap Treasury Treasury Corporate Real Foreign U.S. Gov't Treasury

Bonds Bills Bills Bills Bonds Bonds Stocks Stocks Bonds Stocks Bills Bills Bonds Estate Commodities Stocks Commodities Bonds Commodities Bills

18.34% 5.26% 5.32% 5.01% -1.96% -2.64% -5.63% -15.94% 18.53% 10.88% 3.34% 5.05% 5.11% -39.20% 13.48% 7.76% -1.18% 2.01% -1.22% 0.03%

Real Foreign Foreign Small-Cap Real Small-Cap Large-Cap Mid-Cap Corporate Corporate U.S. Gov't Corporate Treasury Mid-Cap Foreign U.S. Gov't Mid-Cap Foreign Corporate Foreign

Estate Bonds Stocks Stocks Estate Stocks Stocks Stocks Bonds Bonds Bonds Bonds Bills Stocks Bonds Bonds Stocks Bonds Bonds Bonds

12.24% 4.09% 1.78% -2.56% -2.57% -3.03% -11.88% -16.19% 7.70% 5.24% 2.65% 4.26% 4.99% -41.46% 4.37% 5.53% -1.73% 1.50% -2.01% -2.68%

Foreign Corporate Foreign Real U.S. Gov't Large-Cap Foreign Small-Cap U.S. Gov't U.S. Gov't Corporate U.S. Gov't Small-Cap Foreign Treasury Foreign Small-Cap Treasury U.S. Gov't Foreign

Stocks Bonds Bonds Estate Bonds Stocks Stocks Stocks Bonds Bonds Bonds Bonds Stocks Stocks Bills Bonds Stocks Bills Bonds Stocks

11.21% 3.28% -4.26% -17.00% -2.23% -9.10% -21.43% -20.48% 2.36% 3.48% 1.96% 3.48% -1.55% -43.39% 0.24% 5.21% -4.17% 0.11% -2.61% -4.90%

Treasury U.S. Gov't Foreign Foreign Large-Cap Treasury Treasury Foreign Real U.S. Gov't Treasury Foreign Foreign

Bills Bonds Commodities Commodities Bonds Stocks Commodities Stocks Bills Bills Bonds Commodities Estate Commodities Bonds Bills Stocks Commodities Bonds Commodities

5.79% 2.77% -14.07% -35.75% -5.08% -14.19% -31.93% -22.09% 1.05% 1.43% -9.20% -15.10% -17.56% -46.49% -2.19% 0.13% -12.13% 0.06% -4.00% -33.06%

Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation(CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI)2.5% 3.3% 1.7% 1.6% 2.7% 3.4% 1.6% 2.4% 1.9% 3.3% 3.4% 2.5% 4.1% 0.1% 2.7% 1.5% 3.0% 1.7% 1.5% 0.8%

BONDS

Bond Return Histograms

The histogram illustrations on the following pages represent frequency distributions for the Ibbotson U.S. Long-Term Government Bond Index total returns based on a variety of time periods: •1-year holding period•5-year holding period*•10-year holding period*•20-year holding period* 

(*returns calculated on a rolling annualized basis)

For each chart and each return range, the index return history is sorted from highest to lowest for each segment.

For example, in the 1-year holding period chart, the years 1969, 1931, 1956, 1958, 1994, 1999 and 1967 fall into the return interval of -10% to -5%, with 1969 delivering the highest return and 1967 having the lowest return.

U.S. LT Government Bonds Annual Return Histogram

1935193019742001 1920s1966 1930s1953 1940s1964 1950s1929 2007 1960s1948 1988 1970s2012 1975 1980s1942 1927 1990s

1933 1944 2004 2000s1946 1943 1992 2010s1968 1981 20051977 2003 19261996 1963 19361973 2006 19571978 1952 1954 1991

1969 1979 1961 1962 1960 19931931 1955 1941 1949 1971 19891956 1959 1965 1990 1998 20021958 1947 1983 1940 1970 19321994 1987 1937 1939 1945 1976 1986

2013 1999 1951 1928 1972 2010 1997 2014 2011 19952009 1967 1980 1950 1938 1934 1984 2000 2008 1985 1982

25% to

30%

20% to

25%

15% to

20%

10% to

15%

40% to

45%

30% to

35%

35% to

40%

5% to

10%

-15% to

-10%

-10% to

-5%

-5% to

0%

0% to

5%

U.S. LT Government Bonds Annualized Rolling 5-Year Return Histogram1940

193519341930197219391973 1930s1937 1940s1979 1950s1942 1960s1963 1970s1945 1980s1941 2014 1990s1946 1984 2000s1932 1991 2010s1933 19981943 20121949 19991966 19961944 20021948 20011965 19941961 20051947 19361962 20001931 20061957 19762013 19741971 20031980 1983 19881954 1975 19931953 1982 19951950 2007 1987

1970 1952 1938 19921967 1955 2010 19901968 1960 1977 20111981 1956 1978 19971959 1951 1964 2008 19851969 1958 2009 2004 1989 1986

-5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% 20% to 25%

U.S. LT Government Bonds Annualized Rolling 10-Year Return Histogram1940

19351936193919381943 1930s1945 1940s1942 1950s1976 1960s1937 1970s1944 1980s1980 1990s1946 2000s1947 2010s194919481975 20041966 19861981 20021950 19871954 19961971 19851972 20111962 19991974 20011951 20081973 20031953 20061963 20091952 20051965 20121957 20141968 2007 19931961 1984 19901964 2010 19891969 2013 19921955 1983 19951970 1982 19941960 1941 19981967 1979 19971958 1977 1988

1959 1956 1978 2000 1991 -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20%

U.S. LT Government Bonds Annualized Rolling 20-Year Return Histogram1945

1984

1946

1949

1982

1983 1940s

1948 1950s

1951 1960s

1950 1970s

1947 1980s

1976 1990s

1979 2000s

1978 2010s

1953

1954

1952

1977

1955

1981

1980

1957 2008

1975 2005

1972 1996

1956 1994

1962 2007

1964 1992

1971 1989

1973 1991

1963 2011

1958 1990

1974 2014 2001

1961 2006 2000

1960 2012 2003

1966 2010 1998

1965 2009 2002

1959 1988 2004

1967 1987 1999

1968 2013 1995

1970 1986 1997

1969 1985 1993

0% to 5% 5% to 10% 10% to 15%

Disclosures

Performance represents the total return of the Ibbotson U.S. Long-Term Government Bond Index over a variety of time periods.  The Ibbotson U.S. Long-Term Government Bond Index is an unweighted index which measures the performance of twenty-year maturity U.S. Treasury Bonds. Each year a one-bond portfolio containing the bond having closest to 20 years to maturity is constructed. To measure holding period returns for the one-bond portfolio, it is prices (with accrued coupons) over the holding period and total returns are calculated, including investment of income. Index returns include dividend and/or interest income and do not reflect the removal of fees or expenses.  Index performance is provided as a benchmark but is not illustrative of any particular investment.  An investment cannot be made in an index and market indexes do not include expenses.      The performance data shown represents past performance, which is not a guarantee of future results.  Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.     

Sources: Ibbotson, FPS calculations                                                                                                                                                                                                                                                            

Bond Real Return HistogramsThe histogram illustrations on the following pages represent frequency distributions for the Ibbotson U.S. Long-Term Government Bond Index total real returns based on a variety of time periods: •1-year holding period•5-year holding period*•10-year holding period*•20-year holding period* 

(*real returns calculated on a rolling annualized basis)

“Real” returns are defined as the annual index return less each year’s respective annual change in the Consumer Price Index for Urban Consumers (CPI-U). This creates an inflation-adjusted real return history. For each chart and each return range, the index real return history is sorted from highest to lowest.

For example, in the 1-year holding period chart, the years 2000, 1991, 1993 and 2002 fall into the return interval of 15% to 20%, with 2000 delivering the highest real return and 2002 having the lowest real return.

U.S. LT Government Bonds Annual Real Return Histogram

19572005 19711931 19261929 20101953 19451964 1938

1968 1972 19491950 1963 1975 19341942 2003 2001 19541981 1933 1935 1970

1978 1987 1943 2012 1939 19971994 1977 1965 1928 1936 19891969 1974 2006 1944 2007 19601947 1958 1955 1948 1962 1976 19951999 1956 1937 1961 1988 1984 2000 1985

1980 1967 1941 1983 1966 2004 1998 1991 19322009 2013 1951 1959 1952 1992 1927 1993 1986 20081946 1979 1973 1996 1990 1940 1930 2002 2014 2011 1982

1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

20% to

25%

25% to

30%

30% to

35%

35% to

40%

0% to

5%

5% to

10%

10% to

15%

15% to

20%

-20% to

-15%

-15% to

-10%

-10% to

-5%

-5% to

0%

U.S. LT Government Bonds Annualized Rolling 5-Year Real Return Histogram1956

197420131955197619731975 19931960 1987

1930s 1953 2000 19341940s 1943 1994 19321950s 1954 1940 19331960s 1958 2006 20111970s 1952 1938 20141980s 1945 2003 19361990s 1944 1939 19972000s 1967 1964 19922011s 1977 2010 2004

1983 1984 19351978 2007 20081971 1963 20121949 1937 19981968 2009 19301959 1941 19991946 1965 20021951 1966 19901982 1962 20011979 1961 1996 1985

1950 1948 1957 1931 19891969 1970 1942 2005 1988

1981 1980 1947 1972 1991 1995 1986 -15% to -10% -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20%

U.S. LT Government Bonds Annualized Rolling 10-Year Real Return Histogram1957

19681960196719841971 19901972 1992

1930s 1946 19981940s 1969 19951950s 1977 19941960s 1958 19971970s 1970 20001980s 1976 19351990s 1978 20042000s 1956 1941 20022010s 1973 2007 1989

1947 2010 19361979 1988 19391954 2013 20111959 1987 19381983 1986 20011949 1942 19401953 1943 20081975 1985 19991948 1945 19961955 1966 19371974 1962 20031952 1944 20061982 1963 20141950 1961 20091951 1965 2005 1991

1981 1980 1964 2012 1993

-10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15%

U.S. LT Government Bonds Annualized Rolling 20-Year Real Return Histogram1972

19711976 1940s1966 1950s1967 1960s1953 1970s1954 1980s1985 1990s1973 2000s1968 2010s195219551977196419781963 19951962 20131970 1945 20011957 1996 20001975 1993 20031965 1994 20021974 1946 20041956 1992 20081979 1989 20051961 1991 19991969 1990 20141984 1949 19981958 1947 20111960 1948 20071982 1988 20121983 1950 20101959 1987 20061980 1951 20091981 1986 1997

-5% to 0% 0% to 5% 5% to 10%

Disclosures

Performance represents the total return of the Ibbotson U.S. Long-Term Government Bond Index over a variety of time periods.  The Ibbotson U.S. Long-Term Government Bond Index is an unweighted index which measures the performance of twenty-year maturity U.S. Treasury Bonds. Each year a one-bond portfolio containing the bond having closest to 20 years to maturity is constructed. To measure holding period returns for the one-bond portfolio, it is prices (with accrued coupons) over the holding period and total returns are calculated, including investment of income. Index returns include dividend and/or interest income and do not reflect the removal of fees or expenses.  Index performance is provided as a benchmark but is not illustrative of any particular investment.  An investment cannot be made in an index and market indexes do not include expenses.      The performance data shown represents past performance, which is not a guarantee of future results.  Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.     

The Consumer Price Indexes (CPI) measure changes in the prices paid by urban consumers for a representative basket of goods and services.

Sources: Ibbotson, Bureau of Labor Statistics, FPS calculations                                                                                                                                                                                                                                                            

Bonds and Interest Rates

How do changes in rates affect bond prices?

If current interest rates increase, existing traditional bonds become less attractive and prices move lower.

Conversely—if interest rates decrease—prices of traditional bonds become more attractive and increase.

Interest Rates Rise

Bond Prices Fall

Interest Rates Fall

Bond Prices Rise

If: Then:

Duration

When interest rates changes, how much do bond prices change?

A mathematical measure called “duration” estimates how sensitive a bond/portfolio is to rate changes. If the stated duration is 5 years, a 1% rate change will cause the bond/portfolio value to move about 5% in the opposite direction.Interest Rates Rise +1%

Bond Prices Fall About -5%

Interest Rates Fall -1%

Bond Prices Rise About +5%

If: Then:Duration: 5 Years

STOCKS

Disclosures

Performance represents the total return of the Standard & Poor's 500 Index over a variety of time periods.  The Standard & Poor’s 500 is an unmanaged, market capitalization-weighted index of 500 widely held stocks of large-cap U.S. companies and is commonly used as a gauge of the overall U.S. equity market.  Index returns include dividend and/or interest income and do not reflect the removal of fees or expenses.  Index performance is provided as a benchmark but is not illustrative of any particular investment.  An investment cannot be made in an index and market indexes do not include expenses.      The performance data shown represents past performance, which is not a guarantee of future results.  Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.     

The Consumer Price Indexes (CPI) measure changes in the prices paid by urban consumers for a representative basket of goods and services.

Sources: Ibbotson, Bureau of Labor Statistics, FPS calculations  

                                                                                                                                                                                                                                                          

S&P 500 Return Histograms

The histogram illustrations on the following pages represent frequency distributions for S&P 500 index total returns based on a variety of time periods: •1-year holding period•5-year holding period*•10-year holding period*•20-year holding period* 

(*returns calculated on a rolling annualized basis)

For each chart and each return range, the index return history is sorted from highest to lowest for each segment.

For example, in the 1-year holding period chart, the years 1966, 1957, 1941, 2001 and 1973 fall into the return interval of -15% to -10%, with 1966 delivering the highest return and 1973 having the lowest return.

S&P 500 Annual Return Histogram

1944

1972 1936

1949 1951 1997

1977 1992 1971 1986 1967 1980

1946 1978 2014 1979 1976 2013

1932 1956 1965 1952 1996 1985

1966 1929 1939 2005 1984 1959 1988 1963 2003 1950

1957 1969 1953 1970 1947 1926 1964 1983 1998 1955 1927

1941 1962 1934 2011 1948 1968 2012 1982 1961 1989 1995

1937 1930 2001 2000 1990 1994 2007 2004 2006 1999 2009 1938 1975 1928 1933

1931 2008 1974 2002 1973 1940 1981 1960 1987 1993 2010 1942 1943 1991 1945 1958 1935 1954

1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

40% to

45%

45% to

50%

50% to

55%

10% to

15%

15% to

20%

20% to

25%

25% to

30%

30% to

35%

35% to

40%

5% to

10%

-45% to

-40%

-40% to

-35%

-35% to

-30%

-30% to

-25%

-25% to

-20%

-20% to

-15%

-15% to

-10%

-10% to

-5%

-5% to

0%

0% to

5%

S&P 500 Annualized Rolling 5-Year Return Histogram

1959

1947

1979

1984

1985

1993

1937

1982 1986

1980 1952

1969 1957 2000

1976 1962 2013

1942 1965 1946

1978 1950 1990 1953

1943 1963 2007 1983

1970 1960 1961 1945

1975 1994 1967 1951 1998

1977 1935 1930 1939 1995 1954

2011 2010 1971 1948 1987 1955

2003 1973 1981 1964 1992 1936

2002 2012 1944 2001 2014 1958

1931 2008 2005 1972 1949 1988 1989

1933 1941 2004 1940 2006 1938 1991 1997

1932 1934 1974 2009 1966 1968 1996 1956 1999

-15% to -10% -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% 20% to 25% 25% to 30%

1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

S&P 500 Annualized Rolling 10-Year Return Histogram1968

19721947

1930s 19421940s 20021950s 19441960s 19661970s 19491980s 20051990s 1980 19592000s 2006 19982010s 1945 1956

1970 1993 19991969 1995 19971936 1984 19912014 1994 19892013 1985 20001948 1953 19511943 1990 19542012 1986 19521971 1962 1955

1946 1982 1950 19571977 1976 2001 19611975 1981 1967 1988

1937 1978 1941 1964 19921939 2011 1973 2004 19601938 1940 2007 1965 19632009 2010 1979 2003 19962008 1974 1935 1983 1987 1958

-5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% 20% to 25%

S&P 500 Annualized Rolling 20-Year Return Histogram1940s 1964

1950s 19681960s 19601970s 19671980s 19951990s 19942000s 19962010s 1959

19651966

19582014 19691988 20041987 19522013 19542010 20031985 19572008 19931980 20021982 19551983 19702012 20052009 19911977 20071976 20062011 19511984 19721950 1971 19991945 1989 19981975 1992 19611974 1956 19971979 1990 2000

1947 1981 1973 19621949 1978 1953 20011948 1946 1986 1963

0% to 5% 5% to 10% 10% to 15% 15% to 20%

Disclosures

Performance represents the total return of the Standard & Poor's 500 Index over a variety of time periods.  The Standard & Poor’s 500 is an unmanaged, market capitalization-weighted index of 500 widely held stocks of large-cap U.S. companies and is commonly used as a gauge of the overall U.S. equity market.  Index returns include dividend and/or interest income and do not reflect the removal of fees or expenses.  Index performance is provided as a benchmark but is not illustrative of any particular investment.  An investment cannot be made in an index and market indexes do not include expenses.      The performance data shown represents past performance, which is not a guarantee of future results.  Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.     

Sources: Ibbotson, FPS calculations                                                                                                                                                                                                                                                            

S&P 500 Real Return HistogramsThe histogram illustrations on the following pages represent frequency distributions for S&P 500 index total real returns based on a variety of time periods: •1-year holding period•5-year holding period*•10-year holding period*•20-year holding period* 

(*real returns calculated on a rolling annualized basis)

“Real” returns are defined as the annual index return less each year’s respective annual change in the Consumer Price Index for Urban Consumers (CPI-U). This creates an inflation-adjusted real return history. For each chart and each return range, the index real return history is sorted from highest to lowest.

For example, in the 1-year holding period chart, the years 1940, 2000, 1966, 2001, 1957, 1981, 1977 and 1969 fall into the return interval of -15% to -10%, with 1940 delivering the highest real return and 1969 having the lowest real return.

S&P 500 Annual Real Return Histogram

19801996

2012 19761992 2010 1983

1940 2011 1956 2006 1999 19952000 1960 1948 1926 1951 1985 19451966 1994 1984 2014 1944 1991 19382001 1970 1932 1988 1982 2009 1998 19361957 1953 2005 2004 1942 1952 1943 1989 1997

2008 1941 1981 1929 1978 2007 1993 1971 1986 1963 2003 1955 19351937 1973 1977 1990 1947 1987 1968 1965 1972 1967 1961 2013 1928 19331974 1931 1946 2002 1930 1969 1962 1934 1939 1979 1959 1964 1949 1950 1975 1927 1958 1954

1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

5% to

10%

-40% to

-35%

-35% to

-30%

-30% to

-25%

-25% to

-20%

-20% to

-15%

-15% to

-10%

-10% to

-5%

-5% to

0%

0% to

5%

40% to

45%

45% to

50%

50% to

55%

10% to

15%

15% to

20%

20% to

25%

25% to

30%

30% to

35%

35% to

40%

S&P 500 Annualized Rolling 5-Year Real Return Histogram

19951931 1939 20141940 2007 19871943 1946 19591970 1980 1985 19961981 1982 1964 1951

2009 1966 1938 19572005 1971 1990 19622011 1949 1983 19372002 2006 1963 19652003 1948 2001 1988 19561976 1972 1984 1992 19971973 1944 1935 1945 19521934 1950 1968 1930 1989 1936

1933 1978 1969 1960 1961 1986 19551932 2008 1942 1947 1991 2013 19981977 1975 2010 1979 1993 1953 1954

1941 1974 2004 2012 1994 1967 2000 1958 1999 -15% to -10% -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% 20% to 25% 25% to 30%

1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s

S&P 500 Annualized Rolling 10-Year Real Return Histogram

20041930s 19351940s 1965 19611950s 1990 20001960s 1953 19971970s 1987 19571980s 2003 19631990s 1968 19602000s 1966 19912010s 1984 1989

2012 1985 19921943 1986 19541971 2002 1962

1980 1947 1950 19551946 1940 2005 19522010 2007 1972 19961979 1949 1942 19951982 1939 1944 19641981 1937 2006 19931975 1983 2014 19361977 1938 1941 1967 19582009 1973 1945 1951 19592008 1948 1969 1994 19981978 2011 1970 2001 19561974 1976 2013 1988 1999

-5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20%

S&P 500 Annualized Rolling 20-Year Real Return Histogram2003

19591970

1940s 20021950s 19711960s 19581970s 19961980s 19951990s 19722000s 19942010s 1946 1954

1989 19571992 19521990 20051976 20071977 20061986 1955 19991947 1951 19981974 1973 19611975 2014 19681988 1945 19671949 1956 20011987 2013 20001980 2010 19621985 1953 19631982 1993 19641983 2012 19971978 2008 19661979 2009 19691948 2011 19651984 1991 19601981 1950 2004

0% to 5% 5% to 10% 10% to 15%

Disclosures

Performance represents the total return of the Standard & Poor's 500 Index over a variety of time periods.  The Standard & Poor’s 500 is an unmanaged, market capitalization-weighted index of 500 widely held stocks of large-cap U.S. companies and is commonly used as a gauge of the overall U.S. equity market.  Index returns include dividend and/or interest income and do not reflect the removal of fees or expenses.  Index performance is provided as a benchmark but is not illustrative of any particular investment.  An investment cannot be made in an index and market indexes do not include expenses.      The performance data shown represents past performance, which is not a guarantee of future results.  Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.     

The Consumer Price Indexes (CPI) measure changes in the prices paid by urban consumers for a representative basket of goods and services.

Sources: Ibbotson, Bureau of Labor Statistics, FPS calculations                                                                                                                                                                                                                                                            

Principles

of Asset Allocation

Importance of Asset Allocation

Based on academic research conducted by Brinson, Beebower and Singer (Financial Analysts Journal,1986 and 1991).

Asset Allocation

91%

Security Selection 5%

Market Timing 2%

Other Factors 2%

Three Components in Determining Allocation of Assets

Component #1

Asset Class Rates of Return

Asset Class RelationshipsV

ol a

til i

ty

Specialty Stocks

Small Cap Stock Mid Cap Stock

Foreign Stock

Large Cap Stock

Specialty Bonds

Corporate Bonds

Government Bonds

Foreign Bonds

Real Estate

Commodities

Specialty Stocks

Small Cap Stock Mid Cap Stock

Foreign Stock

Large Cap Stock

Specialty Bonds

Corporate Bonds

Government Bonds

Foreign Bonds

Real Estate

Commodities

This is designed to show general long-term relationships, as opposed to specific results. Actual volatility achieved will likely vary.

Cumulative Long-term Returns (80+ Years)

Based on cumulative index total returns 1926-2013. Source: Ibbotson Associates, U.S. Bureau of Labor Statistics.

Short-Term (1-Year) Returns (%)

Based on single year index total returns. Source: Ibbotson Associates, Morningstar.

Three Components in Determining Allocation of Assets

Component #2

Asset Class Volatility

(“Standard Deviation”)

Distribution of Returns by Asset Class

Histograms show frequency distributions of returns by range, based on index annual returns 1926-2013. Source: Ibbotson Associates, Morningstar.

Reduction of Risk Over Time

One Year Holding Period Five Year Holding Period Ten Year Holding Period Twenty Year Holding Period

-75%

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

Small Company Stocks Large Company Stocks Long-Term Government Bonds

Treasury Bills

Ranges show historic highest and lowest return achieved based on index rolling return periods 1926-2013. Source: Ibbotson Associates, Morningstar.

Three Components in Determining Allocation of Assets

Component #3

Relative Volatility of the Asset

Classes

(“Correlation”)

Correlations

Positive Correlation

Negative Correlation

Correlation refers to how closely the returns of two distinct assets move relative to each other. Positive correlation implies a strong linear relationship, while negative correlation signifies weak one.

Correlations of Asset Classes

Long-term correlations calculated based on annual index returns (1972-2013). Source: Ibbotson Associates, Morningstar.

BondsLarge Cap

StocksSmall Cap

StocksForeign Stocks

Real Estate Commodities

Bonds 100%

Large Cap Stocks 24% 100%

Small Cap Stocks 9% 78% 100%

Foreign Stocks 6% 67% 54% 100%

Real Estate 17% 55% 41% 41% 100%

Commodities -14% -9% -15% -1% -4% 100%

Putting It All Together

Minimize volatility by combining different classes of

assets

Diversifying RiskR

etu

rn

Risk

Based on long-term index total returns and standard deviations (1926-2013). Source: Ibbotson Associates, Morningstar.

50% Stocks / 50% Bonds

25% Stocks / 75% Bonds

100% Bonds

100% Stocks

75% Stocks / 25% Bonds

Diversifying RiskR

etu

rn

RiskBased on long-term index total returns and standard deviations (1972-2013). Source: Ibbotson Associates, Morningstar.

Addition of Real Estate and Commodities

Stocks and Bonds

Moderate Allocation (Balanced) Asset class returns sorted top to bottom, best to worst

Disclosures. Assets are represented by the following indices: Large-Cap Stocks - Standard & Poor's 500; Mid-Cap Stocks - Russell MidCap; Small-Cap Stocks - Russell 2000; Foreign Stocks - MSCI-EAFE (in U.S. $); Foreign Bonds - Citi Non-$ World Government Bond; Corporate Bonds - Barclays Capital Credit; U.S. Gov't Bonds - Barclays Capital Government; Treasury Bills - Citi 3-Month Treasury; Real Estate - Dow Jones Wilshire REIT; Commodities - S&P GSCI; Inflation - Annual change in the Consumer Price Index for Urban Consumers (CPI-U), as calculated by the U.S. Bureau of Labor Statistics; Balanced Portfolio - Annually rebalanced portfolio of 17.5% large-cap stocks, 7.5% mid-cap stocks, 5.0% small-cap stocks, 20.0% foreign stocks, 8.0% foreign bonds, 11.0% corporate bonds, 13.0% U.S. government bonds, 3.0% treasury bills, 10.0% real estate and 5.0% commodities. Index performance is provided as a benchmark but is not illustrative of any particular investment. An investment cannot be made in an index. Market indexes do not include expenses, which are deducted from fund returns. Sources: Morningstar, U.S. Bureau of Labor Statistics. The performance data shown represents past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Large-Cap Real Large-Cap Large-Cap Real Small-Cap Real Real U.S. Gov't Mid-Cap Real Real Real Small-Cap Real

Stocks Estate Stocks Stocks Commodities Commodities Estate Commodities Stocks Estate Commodities Estate Commodities Bonds Stocks Estate Estate Estate Stocks Estate

37.53% 37.04% 33.35% 28.58% 40.92% 49.74% 12.36% 32.07% 47.25% 33.14% 25.55% 35.99% 32.67% 12.39% 40.47% 28.60% 9.24% 17.59% 38.82% 31.78%

Mid-Cap Mid-Cap Foreign Foreign Real Corporate Foreign Mid-Cap Foreign Real Foreign Foreign Foreign Foreign Small-Cap U.S. Gov't Foreign Mid-Cap Large-Cap

Stocks Commodities Stocks Stocks Stocks Estate Bonds Bonds Stocks Stocks Estate Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Stocks

34.45% 33.92% 29.02% 19.93% 27.03% 31.04% 10.40% 21.99% 40.08% 20.25% 13.82% 26.36% 11.47% 10.10% 31.78% 26.85% 9.01% 17.32% 34.76% 13.69%

Small-Cap Large-Cap Small-Cap Foreign Small-Cap U.S. Gov't U.S. Gov't U.S. Gov't Foreign Mid-Cap Foreign Small-Cap Foreign Treasury Real Mid-Cap Corporate Mid-Cap Large-Cap Mid-Cap

Stocks Stocks Stocks Bonds Stocks Bonds Bonds Bonds Stocks Stocks Stocks Stocks Stocks Bills Estate Stocks Bonds Stocks Stocks Stocks

28.46% 22.95% 22.37% 17.79% 21.26% 13.24% 7.23% 11.50% 38.59% 20.23% 13.54% 18.35% 11.18% 2.08% 28.61% 25.49% 8.35% 17.26% 32.39% 13.22%

Corporate Mid-Cap Real Mid-Cap Large-Cap Corporate Treasury Corporate Real Small-Cap Mid-Cap Large-Cap U.S. Gov't Corporate Small-Cap Large-Cap Foreign Small-Cap Foreign Corporate

Bonds Stocks Estate Stocks Stocks Bonds Bills Bonds Estate Stocks Stocks Stocks Bonds Bonds Stocks Stocks Bonds Stocks Stocks Bonds

22.25% 19.00% 19.66% 10.09% 21.04% 9.39% 3.67% 10.52% 36.18% 18.32% 12.65% 15.80% 8.66% -3.08% 27.19% 15.05% 5.17% 16.35% 22.78% 7.53%

Balanced Small-Cap Balanced Balanced Mid-Cap Mid-Cap Small-Cap Real Large-Cap Balanced Mid-Cap Balanced Balanced Large-Cap Balanced Large-Cap Large-Cap Balanced Balanced

Portfolio Stocks Portfolio Portfolio Stocks Stocks Stocks Estate Stocks Commodities Portfolio Stocks Portfolio Portfolio Stocks Portfolio Stocks Stocks Portfolio Portfolio

21.63% 16.51% 12.94% 9.93% 18.23% 8.26% 2.49% 3.60% 28.67% 17.28% 7.33% 15.27% 6.17% -24.06% 26.45% 12.80% 2.12% 15.98% 14.02% 5.43%

Balanced Corporate U.S. Gov't Balanced Treasury Foreign Treasury Balanced Balanced Large-Cap Balanced Mid-Cap Small-Cap Balanced Balanced Balanced Real U.S. Gov't

Commodities Portfolio Bonds Bonds Portfolio Bills Bonds Bills Portfolio Portfolio Stocks Portfolio Stocks Stocks Portfolio Commodities Portfolio Portfolio Estate Bonds

20.33% 14.08% 10.23% 9.85% 12.54% 6.31% -3.55% 1.68% 25.42% 14.61% 4.91% 14.57% 5.59% -33.80% 20.75% 9.02% 0.99% 11.55% 1.86% 4.92%

Foreign Foreign U.S. Gov't Corporate Treasury Balanced Balanced Balanced Foreign Small-Cap Foreign Large-Cap Large-Cap Corporate Corporate Treasury Corporate Treasury Small-Cap

Bonds Stocks Bonds Bonds Bills Portfolio Portfolio Portfolio Commodities Bonds Stocks Bonds Stocks Stocks Bonds Bonds Bills Bonds Bills Stocks

19.55% 6.05% 9.59% 8.57% 4.87% 4.36% -5.11% -2.87% 20.72% 12.13% 4.56% 6.97% 5.50% -37.00% 16.05% 8.24% 0.06% 9.39% 0.10% 4.89%

U.S. Gov't Treasury Treasury Treasury Corporate Foreign Mid-Cap Foreign Foreign Large-Cap Treasury Treasury Corporate Real Foreign U.S. Gov't Treasury

Bonds Bills Bills Bills Bonds Bonds Stocks Stocks Bonds Stocks Bills Bills Bonds Estate Commodities Stocks Commodities Bonds Commodities Bills

18.34% 5.26% 5.32% 5.01% -1.96% -2.64% -5.63% -15.94% 18.53% 10.88% 3.34% 5.05% 5.11% -39.20% 13.48% 7.76% -1.18% 2.01% -1.22% 0.03%

Real Foreign Foreign Small-Cap Real Small-Cap Large-Cap Mid-Cap Corporate Corporate U.S. Gov't Corporate Treasury Mid-Cap Foreign U.S. Gov't Mid-Cap Foreign Corporate Foreign

Estate Bonds Stocks Stocks Estate Stocks Stocks Stocks Bonds Bonds Bonds Bonds Bills Stocks Bonds Bonds Stocks Bonds Bonds Bonds

12.24% 4.09% 1.78% -2.56% -2.57% -3.03% -11.88% -16.19% 7.70% 5.24% 2.65% 4.26% 4.99% -41.46% 4.37% 5.53% -1.73% 1.50% -2.01% -2.68%

Foreign Corporate Foreign Real U.S. Gov't Large-Cap Foreign Small-Cap U.S. Gov't U.S. Gov't Corporate U.S. Gov't Small-Cap Foreign Treasury Foreign Small-Cap Treasury U.S. Gov't Foreign

Stocks Bonds Bonds Estate Bonds Stocks Stocks Stocks Bonds Bonds Bonds Bonds Stocks Stocks Bills Bonds Stocks Bills Bonds Stocks

11.21% 3.28% -4.26% -17.00% -2.23% -9.10% -21.43% -20.48% 2.36% 3.48% 1.96% 3.48% -1.55% -43.39% 0.24% 5.21% -4.17% 0.11% -2.61% -4.90%

Treasury U.S. Gov't Foreign Foreign Large-Cap Treasury Treasury Foreign Real U.S. Gov't Treasury Foreign Foreign

Bills Bonds Commodities Commodities Bonds Stocks Commodities Stocks Bills Bills Bonds Commodities Estate Commodities Bonds Bills Stocks Commodities Bonds Commodities

5.79% 2.77% -14.07% -35.75% -5.08% -14.19% -31.93% -22.09% 1.05% 1.43% -9.20% -15.10% -17.56% -46.49% -2.19% 0.13% -12.13% 0.06% -4.00% -33.06%

Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation Inflation

(CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI) (CPI)

2.5% 3.3% 1.7% 1.6% 2.7% 3.4% 1.6% 2.4% 1.9% 3.3% 3.4% 2.5% 4.1% 0.1% 2.7% 1.5% 3.0% 1.7% 1.5% 0.8%

DisclosuresIndexes used in analysis:

Stocks (broad asset class): Standard & Poor’s 500 Composite Index (1926-2013)Bonds (broad asset class): Ibbotson Long-Term U.S. Government Bond Series (1926-1985), Barclays Capital U.S. Aggregate (1986-2013)Long-Term Government Bonds: Ibbotson Long-Term U.S. Government Bond Series (1926-2013)Long-Term Corporate Bonds: Ibbotson Long-Term U.S. Corporate Bond Series (1926-2013)Large Cap Stocks: Standard & Poor’s 500 Composite Index (1926-2013)Small Cap Stocks: Ibbotson Small Company Return Series/CRSP Deciles 6-10 (1926-2013) International Stocks: Morgan Stanley Capital International – Europe, Australia & Far East Index (1972-2013) International Bonds: Citi/Salomon Non-Dollar World Government Bond Index (1985-2013)Real Estate: National Association of Real Estate Investment Trusts – Equity REIT Index (1972-2013)Commodities: S&P/Goldman Sachs Commodities Index (1972-2013)Inflation: Consumer Price Index for Urban Consumers (CPI-U) (1926-2013)

On the efficient frontier slides: ‘Return’ represents average annualized total returns of different combinations of market indexes (on the vertical axis). These consist of monthly total returns that are chained geometrically, and include both price appreciation and dividends. ‘Risk’ is represented by annualized standard deviation of monthly returns of combined market index portfolios (and are displayed on the horizontal axis).

Index performance is provided as a benchmark but is not illustrative of any particular investment. An investment cannot be made in an index. Market indexes do not include expenses, which are deducted from fund returns. The performance data shown represents past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost.

How should I be invested?

Depends on how close you are to retirement and how much you need from your portfolio.

April 20, 2023 Page55

Investment Policy – 10 Years to Retirement

Bonds12%

Money Market3%

Commodities6%

Real Estate12%

Stocks67% `

April 20, 2023 Page56

Investment Policy – 5 Years to Retirement

Bonds32%

Money Market3%

Commodities5%

Real Estate9%

Stocks51%

April 20, 2023 Page57

Investment Policy – During Retirement

Bonds52%

Commodities3%

Real Estate7%

Stocks35%

Money Market3%

Retirement Planning

Planning for varying returns

Eight Percent Growth applied to $1,000,000

Years0 8.0% 1,000,000$ 16.0% 1,000,000$ 1.3% 1,000,000$ 1 8.0% 1,080,000 15.0% 1,160,000 1.5% 1,012,663 2 8.0% 1,166,400 14.0% 1,334,000 2.0% 1,027,853 3 8.0% 1,259,712 13.0% 1,520,760 3.0% 1,048,410 4 8.0% 1,360,489 12.0% 1,718,459 4.0% 1,079,863 5 8.0% 1,469,328 11.0% 1,924,674 5.0% 1,123,057 6 8.0% 1,586,874 10.0% 2,136,388 6.0% 1,179,210 7 8.0% 1,713,824 9.0% 2,350,027 7.0% 1,249,963 8 8.0% 1,850,930 8.0% 2,561,529 8.0% 1,337,460 9 8.0% 1,999,005 8.0% 2,766,452 8.0% 1,444,457

10 8.0% 2,158,925 8.0% 2,987,768 8.0% 1,560,013 11 8.0% 2,331,639 8.0% 3,226,789 8.0% 1,684,814 12 8.0% 2,518,170 8.0% 3,484,932 8.0% 1,819,599 13 8.0% 2,719,624 8.0% 3,763,727 8.0% 1,965,167 14 8.0% 2,937,194 8.0% 4,064,825 8.0% 2,122,381 15 8.0% 3,172,169 8.0% 4,390,011 8.0% 2,292,171 16 8.0% 3,425,943 8.0% 4,741,212 8.0% 2,475,545 17 8.0% 3,700,018 8.0% 5,120,509 8.0% 2,673,589 18 8.0% 3,996,019 8.0% 5,530,149 8.0% 2,887,476 19 8.0% 4,315,701 7.5% 5,972,561 8.0% 3,118,474 20 8.0% 4,660,957 7.0% 6,420,503 8.0% 3,367,952 21 8.0% 5,033,834 6.5% 6,869,939 8.0% 3,637,388 22 8.0% 5,436,540 6.0% 7,316,485 9.0% 3,928,379 23 8.0% 5,871,464 5.5% 7,755,474 10.0% 4,281,933 24 8.0% 6,341,181 5.0% 8,182,025 11.0% 4,710,126 25 8.0% 6,848,475 4.5% 8,591,126 12.0% 5,228,240 26 8.0% 7,396,353 4.0% 8,977,727 13.0% 5,855,629 27 8.0% 7,988,061 3.5% 9,336,836 14.0% 6,616,861 28 8.0% 8,627,106 3.0% 9,663,625 15.0% 7,543,221 29 8.0% 9,317,275 1.1% 9,953,534 16.0% 8,674,704 30 10,062,657$ 10,062,657$ 10,062,657$

Average 8.0% 8.0% 8.0%

Straight 8%

High then Low8%

Low then High8%

8% Growth

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Eight Percent Growth applied to $1,000,000with $80,000 Annual Distribution

Years0 8.0% 1,000,000$ 16.0% 1,000,000$ 1.3% 1,000,000$ 1 8.0% 1,000,000 15.0% 1,080,000 1.5% 932,663 2 8.0% 1,000,000 14.0% 1,162,000 2.0% 866,653 3 8.0% 1,000,000 13.0% 1,244,680 3.0% 803,986 4 8.0% 1,000,000 12.0% 1,326,488 4.0% 748,106 5 8.0% 1,000,000 11.0% 1,405,667 5.0% 698,030 6 8.0% 1,000,000 10.0% 1,480,290 6.0% 652,932 7 8.0% 1,000,000 9.0% 1,548,319 7.0% 612,108 8 8.0% 1,000,000 8.0% 1,607,668 8.0% 574,955 9 8.0% 1,000,000 8.0% 1,656,282 8.0% 540,951

10 8.0% 1,000,000 8.0% 1,708,784 8.0% 504,228 11 8.0% 1,000,000 8.0% 1,765,487 8.0% 464,566 12 8.0% 1,000,000 8.0% 1,826,726 8.0% 421,731 13 8.0% 1,000,000 8.0% 1,892,864 8.0% 375,469 14 8.0% 1,000,000 8.0% 1,964,293 8.0% 325,507 15 8.0% 1,000,000 8.0% 2,041,436 8.0% 271,548 16 8.0% 1,000,000 8.0% 2,124,751 8.0% 213,271 17 8.0% 1,000,000 8.0% 2,214,731 8.0% 150,333 18 8.0% 1,000,000 8.0% 2,311,910 8.0% 82,360 19 8.0% 1,000,000 7.5% 2,416,863 8.0% 8,949 20 8.0% 1,000,000 7.0% 2,518,127 8.0% - 21 8.0% 1,000,000 6.5% 2,614,396 8.0% - 22 8.0% 1,000,000 6.0% 2,704,332 9.0% - 23 8.0% 1,000,000 5.5% 2,786,592 10.0% - 24 8.0% 1,000,000 5.0% 2,859,855 11.0% - 25 8.0% 1,000,000 4.5% 2,922,847 12.0% - 26 8.0% 1,000,000 4.0% 2,974,376 13.0% - 27 8.0% 1,000,000 3.5% 3,013,351 14.0% - 28 8.0% 1,000,000 3.0% 3,038,818 15.0% - 29 8.0% 1,000,000 1.1% 3,049,982 16.0% - 30 1,000,000$ 3,003,420$ -

Average 8.0% 8.0% 8.0%

8% 8%8%Straight High then Low Low then High

8% Growth with $80,000 Annual Distribution

$(500,000)

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Horsetail Chart of Random Series of Returns Based on 8% Growth with 12% Std Deviation

-10000000

-5000000

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

Questions?

Presented by Laurence T. Hanslits, CFP

500 Liberty Street SESuite 310

Salem, OR 97301(503) 371-3333

larryh@thehgroup.comthehgroup-salem.com