Stock Market Volatility and Your Plan

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Stock Market Volatility and Your PlanStay in for the Long Term When Investing for Retirement

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How Asset Classes Have Performed Historically

Source: Underlying data is from the Stocks, Bonds, Bills, and Inflation® (SBBI®) Yearbook, by Roger G. Ibbotson and Rex Sinquefield, updated annually.

Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of 1988. 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

Small stocks in this example are represented by the fifth capitalization quintile of stocks on the NYSE for 1970-1981 and the performance of the Dimensional Fund Advisors, Inc. (DFA) U.S. Micro Cap Portfolio thereafter. Large stocks are represented by the Standard & Poor’s 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general. Government bonds are represented by the 20-year U.S. government bond, Treasury bills by the 30-day U.S. Treasury bill, and inflation by the Consumer Price Index. Stocks represent ownership in a corporation, while bonds, if held to maturity, offer a fixed rate of return and fixed principal value.

Small company stocks are generally more volatile than large company stocks. Government bonds and treasury bills are guaranteed by the full faith and credit of the U.S. government as to the timely payment of principal and interest, while corporate bonds are not guaranteed.

1988 – 2007

Small stocks 13.5% Large stocks 11.8% Government bonds 9.3% Treasury bills 4.5% Inflation 3.0%

Compound annual return

1988 1993 1998 2003

1

10

$20

$2.41$1.82

$5.89

$9.33

$12.54

2007

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Keep a Long-Term PerspectiveDon’t Confuse “Low Risk” with “No Risk”Average Annual Returns for Stocks, Bonds and Cash1987-2006

Past performance is no guarantee of future results.

Source: Morningstar, Inc., March 2007

11.8%

8.6%

3.1%

4.5%

Large Co. Stocks (S&P 500)

U.S. Gov’t. Bonds

T-Bills (Cash)

Inflation (CPI)

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1As of May 12, 20082TV Guide, January 20083U.S. Bureau of Labor Statistics, November 20074National Automobile Dealers Association, May 20075U.S. Department of Housing & Urban Development, November 20076Trends in College Pricing 2007, The College Board’s Annual Survey of Colleges, 2007-2008

Item 1980Current

First-Class Stamp $0.15$0.421

TV Guide $0.40$2.992

Loaf of Bread $0.52$1.243

Average New Car $7,571$28,4514

Average New Home$64,600$298,5005

College Education$4,806$13,5896

(4-year public annual tuition and room and board)

Keep a Long-Term PerspectiveConsider the Rising Cost of Some Basic Items

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BeginsAge 25

This illustration reflects clients with a $25,000 annual salary making 6% contributions with an 8% rate of return compounded monthly.

This illustration is hypothetical and not intended to represent the performance of any specific investment. Distributions from tax-deferred retirement accounts are subject to income taxes and a possible 10% early distribution penalty.

Jackcontributes$15,000

$250,081

$436,375

StopsAge 35

Jane contributes $60,000

Ending Balanceat Age 65

BeginsAge 25

StopsAge 65

Keep a Long-term PerspectiveConsider the Potential Rewards of Being a Consistent Investor

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Dollar-Cost Averaging Illustration

Average COST paid for shares: $1,200 ÷ 115 shares= $10.43

Average market share PRICE(over the six-month period): $68 ÷ 6 months = $11.33

Monthly SharesAmount Share Purchased

Month Invested Price Each Month

January $200 $10 20.0February $200 $8 25.0March $200 $16 12.5April $200 $10 20.0May $200 $16 12.5June $200 $8 25.0

TOTAL $1,200 $68 115.0

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Keep a Long-term PerspectiveConsider the Number of Years You Have Left Until Retirement

The longer your time horizon, the more risk you should be willing to withstand, giving you:— the ability to ride out the ups and downs of more volatile

investments.

With 10 or more years left until retirement, stock investments still have a place in your retirement portfolio:— think about the retirement years you need to finance, and

— keep your retirement money working hard for you.

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15.918

20.319.520.9

22.4

2000 2025 2050

Male Female

* Source: U.S. Bureau of the Census

Keep a Long-Term PerspectivePeople are Spending More Time in RetirementLife Expectancy after Age 65(Years in Retirement)

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Re-Evaluate Your Asset Allocation Strategy

Consider your:

Risk Tolerance

Investment Goals

Time Horizon

Financial Situation

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Rebalance Your Account PeriodicallyOriginally, your diversified retirement portfolio may have looked something like this . . .

But, today your retirement portfolio may look more like this . . .

Stocks

Bonds

Stable Value

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Powerful Reasons to Continue Investing in Your Retirement Plan

Social Security Uncertainty

The Absence of a Pension Plan

Increased Life Span

Tax-Deferred Growth of Investments and Earnings

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Keep Your Plan on Track

Maintain a Long-Term Perspective

Review Your Asset Allocation Strategy and Rebalance Periodically

Remember the Reasons You Joined Your Plan