© 2009 Morningstar, Inc. All rights reserved. 3/1/2009

Downturns and Recoveries

Stock Market Contractions and Expansions1973–2008

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

0

1

10

$100

20082003199819931988198319781973

• Contraction• Expansion• Stocks

0

200

400%

–200

–42.6% –14.3% –16.5% –29.6% –14.7% –15.4%–44.7%

86.0% 87.0%

279.6%

71.5%

355.1%

62.6%108.4%

–40.1%

Market Downturns and Recoveries1926–2008

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

–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

–40.1%

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

14 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

TBD

3 months

Recovery

TBD*Nov 2007–Dec 2008

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

Periods of Consecutive Negative Stock Returns1926–2008

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

20%

37%

29%

54%

–25%

–12%

–0.4%–10%

–26%

–8%

–43%

–8%

–15%

–9%–12%

–22%

Average stock market return from 19262008 was 9.6%

–50

–40

–30

–20

–10

0

10

20

30

40

50

60% Return

1939 1940 1941 1942 2000 2001 2002 20031973 1974 19751929 1930 1931 1932 1933

Stock Performance During Recessions1946–2008

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

Shaded regions denote economic recessions

0.10

1

10

100

$1,000

1946 1956 1966 1976 1986 1996 2006

1949

1954

1958

1960

1970 19

74

1980 19

82

1990

2001

2008

Stock Performance After Recessions1946–2008

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

3.8%

20.1%

33.7%

74.0%

2.2%

11.4%

19.1%

47.7%

After 3 yearsAfter 1 yearAfter 6 monthsAfter 1 month

0

10

20

30

40

50

60

70

80% Return

• Small stocks• Large stocks

History of Interest RatesJuly 1954–December 2008

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

Current

5.62%

6.69%6.25%

Average: 5.69%

0

5

10

15

20%

Federalfunds

LT governmentyield

IT governmentyield

1-yr government yield

0

2

4

6

8

10

12

14

16

18% Yield

1996 200619861976196619561946

Bond Yields During Recessions 1946–2008

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

0.49%

3.03%

Shaded regions denote economic recessions

• Short-term govt bonds (4/53–12/08)• Long-term govt bonds

Stock Returns and Monetary PolicyAnnualized monthly returns, July 1971–December 2008

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

• Restrictive • Expansive

–21.6%

–1.9%

3.5%

2.5%

–2.2%

Dec 74–Jul 77

May 80–Aug 80

Nov 81–Mar 84

Dec 90–Apr 94

Jan 96–Jul 99

Nov 84–Aug 87

Jan 01–Jun 04

Aug 07–Dec 08

Aug 99–Dec 00

May 94–Dec 95

Sep 87–Nov 90

Apr 84–Oct 84

Sep 80–Oct 81

Aug 77–Apr 80

Jan 73–Nov 74

Nov 71–Dec 72

Jul 71–Oct 71

Monetary period

13 months

31 months

3 months

28 months

40 months

42 months

33 months

41 months

3 months

16 months

16 months

19 months

38 months

6 months

13 months

32 months

22 months

Period length*

Jul 04–Jul 07 36 months

22.1%

5.7%

13.7%

10.1%

24.5%

19.6%

44.5%

16.0%

30.5%

12.9%

24.3%

11.4%

Average return –30 0% 10 20 30 40–10–20

–32.0%

Entire period average = 10.3%

U.S. Market Recovery After TragedyCumulative return of stocks after tragic events

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

80%

60

40

20

0

–20 Dec 7, 1941:Pearl Harbor

Aug 2, 1990:Iraq invades Kuwait

Feb 26, 1993:World Trade Center bombed

Sep 11, 2001:Terrorist attack

1.9%2.1%

–4.9%

1.6%

• After 1 month• After 6 months

–1.0%

15.9%

6.1%

11.0%

• After 1 year

–20.5%

8.3%

26.9%

20.3%

• After 3 years

81.4%

57.8% 56.7%

12.6%

40

20

0

–20

–40

U.S. Market Recovery After Financial CrisesCumulative 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. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009

100% Return

80

60

–8.2%

October 1987:Stock market crash

• After 1 month

• After 6 months

• After 1 year

• After 3 years

• After 5 years

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

–0.4%

8.1%

–3.0%

1.9%5.5%

–4.0%

27.3%

–3.6%

11.0%14.8%

–5.0%

27.8%

–21.7% –20.5%

34.3%30.1%

6.2%

–40.9%

12.6%

97.1%

58.1%

5.1%

–14.8%

40.1%

Portfolio

100% stocks

40

20

0

–20

–40

U.S. Market Recovery After Financial CrisesCumulative 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. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009

100% Return

80

60

–4.8%

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

–0.2%

4.0%

–2.1%

3.0%5.2%

–2.0%

13.2%

–0.7%

5.0%

14.3%

–2.3%

12.3%

–8.9% –7.1%

34.3% 34.6%

11.3%

–15.3%

19.6%

90.1%

59.2%

20.3%

10.3%

42.3%

Portfolio

60% stocks

40% bonds

• After 1 month

• After 6 months

• After 1 year

• After 3 years

• After 5 years