Download - Market - Morningstar market crash t Pearl Harbor May Day, the deregulation of brokerage fees Ibbotson SBBI Bonds, Bills, and Inflation 1926 –2009 Hypothetical value of $1 invested

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Data on the images displayed have been altered and are for illustrative purposes only.

1972

*2009 values have been annualized

*

1976 1980 1984 1988 1992 1996 2000 2004 2008

Last 1 Year 5 Years 20 Years 37 Years

30%

25

–5

20%

10

15

0

5

Annual Income Returns

Total and Income Returns as of December 2009

0

10

20

15

5

REITs Domestic Bonds Domestic Stocks International Stocks Income Return

0.1%

6.4%4.0%

2.6%4.0%

5.1%

2.1%4.7% 3.2%

7.0% 6.2%

2.2% 2.3%

8.1%

7.8%3.2% 2.8%

–0.6%

11.2%

6.0%

9.8%11.1%

0.3%

8.0%9.6% 9.8%

4.7%5.6%

28.4%

9.1% 8.5% 8.6%

Retirement Income VehiclesJanuary 1972–December 2009

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.

HighestReturns

LowestReturns

2009

32.5%

28.1%

26.5%

14.0%

0.1%

–14.9%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

7.8% 44.6% 23.3% 32.9% 8.1% 37.6% 23.0% 33.4% 28.6% 29.8% 21.5% 22.8% 17.8% 60.7% 20.7% 14.0% 26.9% 11.6% 25.9%

6.2% 30.5% 8.1% 21.0% 3.9% 34.5% 17.6% 22.8% 20.3% 27.3% 5.9% 3.8% 1.6% 39.2% 18.4% 7.8% 16.2% 9.9% 1.6%

–3.1% 22.3% 7.6% 18.2% 3.1% 31.7% 10.3% 15.9% 13.1% 21.0% 0.6% 3.7% –6.5% 28.7% 12.0% 7.3% 15.8% 5.5% –20.7%

–6.8% 19.3% 6.0% 17.0% 1.8% 23.8% 6.4% 15.9% 12.2% 14.3% –3.6% –0.8% –13.3% 24.8% 10.9% 5.7% 12.9% 5.4% –36.7%

4.7%–21.6% 12.5% 3.5% 10.1% 1.3% 11.6% 5.2% 5.3% 4.9% 4.7% –9.1% –11.9% –15.7% 1.4% 8.5% 4.9% 4.8% –37.0%

–5.2%–23.2% 5.6% –11.8% 2.9% –7.8% 5.6% –0.9% 2.1% –7.3% –9.0% –14.0% –21.2% –22.1% 1.0% 1.2% 3.0% 1.2% –43.1%

Small Stocks Large Stocks Long-Term Government Bonds Treasury Bills International Stocks Diversified Portfolio

Asset-Class Winners and LosersAnnual asset-class returns from highest to lowest

Past performance is no guarantee of future results. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.

Asset Class Winners and Losers

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Begin 1926End 1930

19301934

19341938

19381942

19421946

19461950

19501954

19541958

19581962

19621966

19661970

19701974

19741978

19781982

19821986

19861990

19901994

19941998

19982002

20022006

1926 1936 1946 1956 20061996198619761966

300

100

0.50

1

0.50

0.25

0.75

0

–0.50

–0.25

vs. High-Yield Corp Bonds vs. Corporate Bonds vs. Long-Term Govt Bonds vs. Intermediate-Term Govt Bonds Correlation of stocks to bonds, 60-month rolling periods

Growth of $1

$1

10

$233

$121

$79$89

High-Yield Corp Bonds 6.7%Corporate Bonds 5.9Long-Term Govt Bonds 5.5Intermediate-Term Govt Bonds 5.4

Compound Annual Return

Bond Performance and Diversification BenefitsJanuary 1926–December 2009

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.

Bond Performance and Diversification Benefits

1995 2000 2005

10,000

1,000

100

10

$1

0.10

$15,091

$3,246

$79

$20

$12

19901985198019751970196519601955195019451940193519301926

Small Stocks 12.5% Large Stocks 10.4Long-Term Govt Bonds 5.5Treasury Bills 3.7Inflation 3.0


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Ibbotson SBBIStocks, Bonds, Bills, and Inflation 1926–2009

Hypothetical value of $1 invested at the beginning of 1926. Assumes reinvestment of income and no transaction costs or taxes. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Ibbotson SBBI 1926–2009

13% Return

12

11

10

9

10% Risk 11 12 13 14 15 16 17

Maximum Risk Portfolio100% StocksMaximum Risk Portfolio100% Stocks

Minimum Risk Portfolio25% Stocks, 75% Bonds

100% Bonds

50% Stocks, 50% Bonds



Stocks and Bonds: Risk Versus Return1970–2009

This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Stocks and Bonds: Risk Versus Return

125

100

75

50

25

0

–25

–50

150%

Small-Company Stocks

1-Year 5-Year 20-Year

Government Bonds


Holding Periods

12.5%

Large-Company Stocks

10.4%


Treasury Bills

3.7% Compound Annual Return


5.5%

Reduction of Risk Over TimeRange of Returns 1926 –2009


Reduction of Risk Over Time

50%

0

50%

0

50%

0

One-year returns

5-year annualized returns

15-year annualized returns

Periods with lossPeriods with gain

Each bar represents the average return for the preceding 5-year time period.

Each bar represents the average return for the preceding 15-year time period.

1926 1936 1946 1956 1966 1976 1986 1996 2009

72%

28%

87%

13%

100%

Risk of Stock Market Loss Over Time1926–2009


Risk of Stock Market Loss Over Time

Jan–Dec 1969 Jan–Dec 1974 Jan–Dec 1979 Jan–Dec 1984 Jan–Dec 1989 Jan–Dec 1994 Jan–Dec 1999 Jan–Dec 2004

40%

30

20

10

75%

50

25

0

–25

–50

Large Growth Large Value

12-Month Rolling Returns

Performance Differential

Growth Versus Value StocksOne-year growth and value trends 1981–2009

Performance differential measures the outperformance of each asset class over one another using 12-month rolling returns. Each 12-month rolling return represents the annualized return for the preceding 12 months. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Growth Versus Value Stocks

100

10

$1

0.10

$54.98

$2.86

$0.55

$1.39

Stocks 5.0% Municipal Bonds 1.3Government Bonds 0.4Treasury Bills –0.7


1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Sepa

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Ibbotson SBBI After Taxes and Inflation1926–2009

Hypothetical value of $1 invested at the beginning of 1926. Assumes reinvestment of income and no transaction costs. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Ibbotson SBBI after Taxes and Inflation 1926–2009

30

20

10

–10

–20

–30

40% Return

1970

0

1975 1980 1985 1990 1995 2000 2005

Annual return minus best monthAnnual return

Market-Timing RiskThe effects of missing the best month of annual returns 1970 –2009


Market-Timing Risk

100% Bonds100% Bonds 75%B | 25%S75%B | 25%S 50%B | 50%S50%B | 50%S 25%B | 75%S25%B | 75%S 100% Stocks100% Stocks

85% 97% 97% 94% 92%

81%

68%

54%

41%

83%

66%

47%

31%

83%

57%

31%

13%

73%

30%

6%

0%

0%

0%

33%

4%

4% Withdrawal Rate

5%

6%

7%

8%

Chance of meeting needs

Probability of Meeting Income NeedsVarious withdrawal rates and portfolio allocations over a 25-year retirement

Results may vary over time and each time the simulation is run. IMPORTANT: The projections or other information 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. No transaction costs or taxes are assumed. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Probability of Meeting Income Needs

7th

9th

11th

18th

19th

22nd

2nd

Hong Kong 41.2%Portugal 48.0%Norway 26.4%Norway 54.6%Sweden 65.4%Austria 17.2%Australia 1.8%Canada 5.4%Singapore 99.7%Greece 78.0%

3rd

Germany 35.6%Ireland 47.2%Denmark 26.0%Greece 46.2%Germany 64.2%Australia –0.3%Ireland –2.9%Denmark 3.7%Sweden 81.5%Belgium 67.7%

1stRank

2009

Finland 49.7%

2008

Spain 49.8%

2007

Canada 29.6%

2006

Austria 72.4%

2005

Greece 69.0%

2004

New Zealand 26.1%

2003

New Zealand 9.4%

2002

Switzerland 6.4%

2001

Finland 156.1%

2000

Finland 121.1%

5.5%

15.8%10.9%

4.9%

–22.1%

28.7%

–11.9%

–9.1%

21.0%

28.6%

Opportunities AbroadAnnual returns of top-performing developed global stock markets 2000–2009

Past performance is no guarantee of future results. Returns expressed in U.S. dollars. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2010 Morningstar, Inc. All rights reserved.

Opportunities Abroad

6% Return

3

–3

–6

Daily returns for all 5,044 trading days

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0

10

8

6

2

0

12% Return

4

Invested for all5,044 trading days

11.8%

10 best days missed

9.2%

20 best days missed

7.2%

30 best days missed

5.4%

40 best days missed

3.8%

50 best days missed

2.3%

The Cost of Market TimingRisk of missing the best days in the market 1990 –2009


The Cost of Market Timing

1,000

100

10

$1

0.10

$644.22

$33.48

$16.33

$6.43

$11.72

Stocks 8.2% Municipal Bonds 4.4Government Bonds 3.5Inflation 3.0Treasury Bills 2.3


1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Sepa

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Ibbotson SBBI After Taxes1926–2009

Hypothetical value of $1 invested at the beginning of 1926. Assumes reinvestment of income and no transaction costs. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Ibbotson SBBI After Taxes 1926–2009

$500,000

300,000

400,000

200,000

100,000

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Withdrawal Rate: 9% 8% 7% 6% 5%

Potential Shortfall: The Risk of High Withdrawal RatesAnnual inflation-adjusted withdrawal as a % of initial portfolio wealth

Portfolio: 50% Large Stocks/50% Intermediate-Term Bonds. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Potential Shortfall: The Risk of High Withdrawal Rates