TrustTalk Current news concerning your Savings Plan

Fall 2008

Weathering the Financial Storm

Investing With Halliburton Year After Year

Year-End Financial Tips

The Golden Rules of Investing

Know the Effects of Inflation

Stretch Your Budget: How to Avoid Outliving Your Savings

Trust Talk is published quarterly by the Halliburton Trust Investments Department. It is designed to provide Savings Plan members with conventional wisdom on saving and investing. The information included in Trust Talk is not intended as investment advice. You may want to consult a financial advisor before making any investment decisions.

Suggestions or comments about Trust Talk can be sent to Sharon Parkes or Maria Bacaling, Trust Investments Department, 10200 Bellaire Blvd., Houston, Texas 77072.

Feature

Weathering the Financial Storm 2

Investing With Halliburton Year After Year 4

Lifestyles

Year-End Financial Tips 6

Investment Know-How

The Golden Rules of Investing 7

Risk Assessment

Know the Effects of Inflation 8

Focus on Funds

S&P 500 Index 9

Newsstand

Market Update 10

Retiree Corner 11

Fund Performance Update 12

Inside This Issue

1

Seated, left to right: Sharon Parkes, Brinda Maxwell. Back row, left to right: Maria Bacaling, Wendy Wang.

The Halliburton Trust Investments Department

The last half of 2008 has seen some unprecedented volatility in the U.S. markets. With news headlines about government bailouts, bank failures and oil prices, it’s natural to feel concerned, or even

panicked, about your investments. But before you start thinking of pulling all of your investments out of the market, take a few moments to refocus. Whatever your feelings, it’s important not to react too quickly. There are a few things to consider before taking any action on your investments to help you weather a financial storm.

Don’t Give Into the Panic

Financial crises make for great headlines, but they aren’t the best trading indicators. Of course you want to keep up with events as they unfold (see the following page for a list of Web sites that provide up-to-date information). However, don’t use the headlines as your investment guide. Making buying or selling decisions based on the latest news updates may not be a winning strategy.

You should make adjustments to your portfolio if you need to — just make sure you’ve got a solid, strategic reason for making changes, rather than changing out of fear. If you take a long-term view of investing, market volatility won’t panic you as much, since over the long run the ups and downs in the market ultimately trend upwards.

Remember Your History Lessons

There are no guarantees in investing, and it’s possible that some investments will never hit their stride again. However, history is on your side when it comes to investing. The numbers tell us that the stock market has risen steadily over the years. The S&P 500 posted a 10.7% average annual

return from 1925

to 2007, which includes 1929-1932, the worst stock market

decline in U.S. history. Given time, it

is likely that a diversified investment portfolio will

increase in value over the long term.

Think Cyclically — Skies Will Clear Again

It’s important to remember that periods of falling prices are a common part of

investing. Experienced investors know that things usually turn back around and their holdings will regain — and potentially surpass — their value of a few months ago. Remember that making systematic purchases every month helps keep ahead of the ups and downs that inevitably occur in the financial markets.

Shift Your Focus

The Dow Jones Composite (Dow) has certainly witnessed some hard times lately, but it’s important to remember that the Dow is not the only benchmark to use when you’re trying to compare your portfolio’s performance against the market. Take a look at the S&P 500. While the Dow contains 30 stocks, the S&P 500 contains 500 stocks making it more diverse than the Dow, just as your portfolio may be more diverse. S&P 500 index funds have actually garnered

Weathering the Financial Storm

Feature

2

Stay Informed About the Storm

Fas

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ts

During this financial crisis, you will probably watch your investments and the news more closely than before. Here are some Web sites that you may find particularly informative:

Site Description

Your Benefit Resources (YBR) http://resources.hewitt.com/halliburtonbenefits

This site provides information specific to your investment accounts and how they are performing, and gives you access to make account changes

Smith Barney http://fa.smithbarney.com/halliburton

This site provides educational articles, online seminar sign-up, tools for retirement and other long-term planning

Bloombergwww.bloomberg.com

This is one of the top financial news sites in the U.S. The content is focused on the stock market, data, news and analytics

MSN Moneywww.moneycentral.msn.com

One-stop-shop for planning and investment advice and other information

Morningstar, Inc.www.morningstar.com

A robust site with content that focuses on research and reporting on mutual funds, stocks and their performance. While some information is free, this is a subscription-based service

The Motley Foolwww.motleyfool.com

This site offers lots of no-nonsense advice and education on investing, financial planning and retirement. Most services are free. You pay for premium services

Smart Moneywww.smartmoney.com

This site focuses primarily on stock market investing, but does have some financial planning information

Yahoo Financehttp://finance.yahoo.com

An all-around financial planning, banking and bill paying site, full of tools and advice

a lot of attention over the last couple of years for good reason. The well-known Vanguard S&P 500 Index Fund has outperformed over 90% of all domestic equity mutual funds over the past five years and Halliburton’s S&P 500 Index Fund has closely tracked the performance of that fund. You may also look at the Russell 1000 Value and Russell 1000 Growth, the benchmarks of your Large Cap Value and Large Cap Growth Funds, which are even broader indices

of the U.S. equity market and the Russell 2000, which is comprised of small companies. Just as you should diversify your portfolio, you should look at a diverse array of indices — the more information you have, the clearer your picture will be.

It’s not easy to sit tight in a volatile market, but it’s your best bet for riding out the storm and sailing into smoother waters.

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Feature

When financial times are troubling, it’s easy to focus on the short term and lose sight of the long-term benefits of investing. When you see your investments take a hit, you may start to wonder if it’s worth investing

at all, since you don’t seem to be gaining much ground. That’s why it’s important to take a step back and look at how the Plan funds have performed year after year, instead of just in the past few weeks or months.

In 1999 the Moderate Premixed Portfolio performed at an impressive 15.1%. However, the next three years — 2000, 2001 and 2002 — the portfolio saw negative returns. Why? In the early 2000s the U.S. financial markets took a downward slide when the “dot-com” bubble burst and the terrorist attacks happened in September 2001. By 2003 the markets were gaining ground, and so did the Moderate Premixed Portfolio, which bounced back to 24.9%. Since 1998 through the end of 2007 the Moderate Premixed Portfolio has had a return of 8.5% — the highs have balanced out the lows, giving investors a solid return on their investment.

Other investment options offered by the Plan tell a similar story. The Balanced Fund — one of the Single Focus Funds — had decreasing returns in the early 2000s, ending with a negative return in 2002. By 2003 the Balanced Fund was in the black again. Since 1998 through the end of 2007 this fund has rounded out at a return of 9.9%, with some highs (20.8% in 2003) and some lows (-6.9% in 2002).

What’s the lesson here? Domestic and international events affect returns, but over the long term, you’re likely to gain, especially if you continue to take advantage of Halliburton’s matching contributions. So, the next time you feel like hitting the panic button on your investments, take a look at the long-term numbers and remember that while a crisis may affect your portfolio in the short term, in the case of investing, being patient pays off. Because everyone’s investment horizon is different, it may be best to consult a financial advisor. Remember that past performance is no guarantee of future returns and should not be the primary reason for choosing an investment fund. However, history shows that given time, if you hold your ground, your investments will likely do the same.

Investing With Halliburton Year After Year

1981 1985 1990 1995 2000 2005

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Halliburton Fund Performance

Halliburton

INVESTMENT FUND

1998 1999 2000 2001 2002 2003 2004 2005 2006 200710-Year

Annualized Return*

PREMIXED PORTFOLIOS

Stable Value 7.4% 6.2% 6.9% 6.7% 5.5% 5.0% 4.8% 5.0% 5.2% 5.3% 6.2%

Conservative 10.4% 11.6% 1.7% -0.2% -3.3% 17.0% 8.6% 6.5% 8.7% 8.4% 7.4%

Moderate 12.9% 15.1% -1.0% -3.6% -9.0% 24.9% 11.6% 8.0% 13.7% 10.8% 8.5%

Aggressive 15.3% 22.8% -5.8% -11.5% -17.8% 32.0% 14.3% 11.0% 17.9% 13.7% 9.1%

SINGLE FOCUS FUNDS

Bond Index Fund 8.3% -0.7% 10.6% 8.2% 10.3% 4.0% 4.2% 2.3% 4.3% 6.9% 6.0%

Balanced Fund 12.1% 4.3% 10.2% 4.1% -6.9% 20.8% 11.3% 6.9% 15.0% 8.4% 9.9%

Large Cap Value Equity Fund

16.4% -6.0% 16.6% -1.8% -14.1% 28.4% 15.9% 8.0% 18.7% 4.3% 11.0%

S&P 500 Index Fund

28.5% 20.9% -9.2% -12.0% -22.2% 28.6% 10.8% 4.8% 15.7% 5.4% 9.0%

Large Carp Growth Equity Fund

31.1% 16.8% -11.8% -18.2% -27.6% 27.3% 7.9% 6.4% 8.3% 16.7% 7.1%

Non-U.S. Equity Fund

12.4% 24.6% -6.7% -18.8% -13.7% 33.1% 18.5% 19.8% 27.4% 20.8% 8.0%

Mid Cap Equity Index Fund

18.0% 15.0% 18.0% -0.5% -14.5% 35.6% 16.5% 12.5% 10.3% 7.9% 14.3%

Small Cap Equity Fund

-7.7% 8.5% 10.7% 2.5% -23.3% 40.0% 14.2% 1.6% 15.7% -1.9% 9.9%

Halliburton Stock Fund

-42.0% 36.7% -9.2% -62.6% 43.7% 40.3% 50.7% 57.3% 1.3% 22.9% 11.1%

To provide comparative historical returns, the managers’ return of their Halliburton Trust account is included above. If the Halliburton Trust has not employed a manger for 10 years, the firm’s composite account return was added.

* The 10-year annualized return return covers the period from 1998 through 2007.

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Lifestyles

If you’re like most people, you’re probably amazed at how fast the year went by. It seems like just a few months ago the year was starting off, and now it’s coming to a close. As 2008 ends, thoughts start drifting towards the holidays, family gatherings and cooler

weather. It’s also a good time to put your financial house in order, so you’ll be ready for next year.

Follow these year-end tips and start 2009 off right.

1. Review your investment strategies. Your life can change significantly over the course of a year. You may have gotten married or divorced; you might have had a child or grandchild, or you may have bought a house. For every major change in your life, you might need to change your investment strategies. Consider what’s changed — your short-term goals or your long-term goals — and then adjust your investment strategy accordingly.

2. Make a charitable gift. By making a gift to a charitable organization, you’ll help a group whose work you support — and you’ll also help yourself. You’ll get an immediate tax break for your contribution.

3. Put extra money to work. If you have a large amount of cash just sitting around earning interest, you might want to shift some of it to an investment that yields a higher rate of return. Talk with your financial planner about your options.

4. Pay off your credit card debt — and don’t buy holiday gifts on credit. Credit card debt is a huge obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it’s so easy to forget that it’s real money when you whip them out to pay for a purchase, especially during the holidays. Pay as much off on your credit cards as you can before the new year, and resolve to end 2009 in the black.

5. Review your investments’ performance. It’s a good idea to review your investment portfolio at least once a year and the end of the year is a great time to do it. As you look over your year-end statements, ask yourself if your investments have performed as you had anticipated. If you find yourself unpleasantly surprised at your portfolio’s performance at the end of the year, you probably need to consider some changes — either in your investment strategy or in your expectations.

6. Pay off your deductible expenses before year’s end. If you pay off your state taxes or property taxes early, that accelerates your federal deductions, so take advantage of this savings vehicle, if you can.

7. Lastly, take time to get organized. Put together a financial binder with your important documents like your statements and prospectuses. Also include the locations of your important personal documents, such as your will, the location of your safety deposit box, bank account numbers, etc. This will make it easier for you to review your finances throughout the year, and you’ll have everything at your fingertips when you need it.

By taking these steps before 2008 ends, you can make 2009 a happy new year.

Year-End Financial Tips

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Investment Know-How

As a child, your parents may have counseled you on the “Golden Rule.” It is less likely that they filled you on the golden rules of investing while you sat around the dinner table. Just like most everything else, there are some important rules

in the world of investing, and if you follow them, you are more likely to encounter fewer problems along the way. Follow these basic rules and you can turn your money into a nest egg that will help keep you comfortable throughout retirement.

Diversify. This is the rule you probably hear most often, and for a good reason. You don’t want to have all your eggs in one basket. Investments can have a few bad years or, in some cases, go belly up. If you sink all of your assets into one investment, you are playing with fire. The “right” level of diversification will depend on your age and your long-term investment goals. In your retirement plan, you have an option of choosing one of the Premixed Portfolios which are already diversified for you.

Plan for the long term. Investing is a marathon, not a sprint. Or for most of us, it should be a marathon. Consider investments that will pay off in the long term — don’t be short-sighted. While a short-term pay-off is great, retirement is a long-term prospect. When it comes to investing, plan for your retirement and not just for your next vacation or car.

Know your risk tolerance. Not all investors are created equally. You need to assess your personal style and work with it. While you do need to diversify (see the first rule), you don’t need to give yourself undue stress. If risky (or even moderately risky) investments are going to keep you up all night, it’s probably not worth the potential reward. Allocate your investments according to your own personal risk tolerance. This is a decision only you can make.

Don’t expect unrealistic returns. Very few people actually become millionaires overnight, so don’t be discouraged if you’re not bringing down the house month after month. If investing were easy, everyone would make a million their first year. Don’t pull out because you’ve had a bad month or

year. If you’ve had a bad year, chances are other investors have too. Just ride it out. And remember, it can be easy to lose money on the stock market in the short term, so it’s generally wise to plan for the long term.

Maximize the Company Match. If you don’t, you’re leaving money on the table. It’s as simple as that.

And finally … stick to the rules. Believe it or not this is the hardest rule for a lot of investors. Investing can be fun and the potential rewards are attractive. Investing is a long-term process. Be patient and expect that you’ll lose a bit here and there. But if you stay on course, you’ll see the return on your investments and be ready for retirement.

The Golden Rules of Investing

7

Risk Assessment

­Inflation. A dreaded word in the world of economics. It’s a plain fact that inflation affects consumers’ wallets — and it can be a hard impact. In 2007, inflation added 4.2% to your cost of living, according to the Consumer Price Index (CPI). Let’s take a look at the effects of

inflation and what you can do about it.

What it means

According to the U.S. Department of Agriculture, in 2007 food price inflation was at its highest level in 17 years, with prices surging 4%, compared to an annual average of 2.5% during the past 15 years. How does this impact you? Think of it this way:

Average Price of a … In 1968 … In 2008 …

New house $22,000 $250,000

Gallon of gas $0.34 $3.80

New car $2,800 $28,000

Movie ticket $1.50 $7.00

Overall, inflation reduces your standard of living because you have to pay more for the same goods and services. When you are working, your wages generally rise as the costs of goods and services increase. Your earnings try to “keep pace with inflation,” so nominal inflation is not generally an issue. However, when you are living off savings, inflation literally robs you of wealth as it destroys your purchasing power. Also, inflation doesn’t impact everything equally, so that some things (such as gas prices) can double while other things (your home) may lose value. This makes financial planning — short-term and long-term — more difficult.

A retirement plan that does not account for inflation is in danger of failing because your desired lifestyle may cost more in the future. Your savings target should take into account how much more money you will need at retirement in order to keep at least the same standard of living that you have today.

What to do

Pay attention to your budget. You may not realize how much more you’re spending on many basic items. Take some time to calculate just how much you are spending a month and make adjustments if the numbers say you should. At the end of the year, you may realize you have extra money to invest in your retirement.

One way to overcome prices that may rise due to inflation is to make your money grow at a rate higher than inflation. For example, if inflation is 3.5% annually, you will need to make your money grow at 3.6% or higher. Otherwise, though you may be saving and investing toward your goals, you may never actually achieve them.

The best approach is to follow the old saying “pay yourself first.” In other words, take out your savings and investment money soon after you get your paycheck. Don’t wait until the end of the month or year to see what’s left. Do some budgeting ahead of time, and you won’t feel the pinch.

Through careful planning and investing, it is possible to overcome inflation and its impact on prices.

Know the Effects of Inflation

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S&P 500 IndexInvestment Objective

The S&P 500 Index Fund is passively managed. This means it seeks risks and returns that are approximately equal to the performance of the Standard & Poor’s (S&P) 500 Index instead of following a manager’s active investment strategy.

The fund invests entirely in 500 U.S. companies whose stock is listed on U.S. exchanges. Although the companies it covers represent a very large percentage of the shares that trade in the marketplace, the fund actually covers a relatively small percentage of the total number of companies in the U.S. marketplace.

Fund Composition Long-Term Potential Risk & Return

Focus on Funds

The S&P 500 is an index of 500 large publicly held U.S. corporations, some of which do business globally. All of the stocks in the index trade on either the New York Stock Exchange or NASDAQ. After the Dow Jones Industrial Average, the S&P 500 is the most widely watched index of large-cap U.S. stocks. It is considered to reflect the U.S. economy.

Many index funds and exchange-traded funds track the performance of the S&P 500 by holding the same stocks as the index, in the same proportions, and thus attempting to match its performance (before fees and expenses). The S&P 500 Index Fund in your retirement plan is no exception.

S&P 500 Index

Small Cap Equity

Mid Cap Equity

Large Cap Value Equity

Large Cap Growth Equity

Halliburton Stock*Non-U.S. Equity

S&P 500 Index

Aggressive PremixedConservative Premixed

Balanced

Moderate Premixed

Bond Index

Stable Value Premixed HigherRisk/HigherReturn

LowerRisk/

LowerReturn

Premixed Portfolios

Single Focus Funds

Market Risk

Inflation Risk

Potential Return

Low MediumLow

Medium MediumHigh

High

U.S. Stocks100%

▲ ▲ ▲ ▲

▲

▲ ▲ ▲ ▲

* As of January 1, 2007, the Halliburton Stock Fund was frozen to any contributions or transfers into the fund.

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Credit Crisis Causes Big Hits on Wall Street and AbroadThe third quarter of 2008 marked a turning point in the credit crisis that began in 2007. During the third quarter the credit crisis accelerated rapidly and spread from the financial sector to impact all capital markets and the world economy as well. September saw a frenzy of activity as the U.S. and foreign governments took action to arrest the failure of the world banking system.

In early September, U.S. mortgage giants Fannie Mae and Freddie Mac were taken over by the U.S. government. Fannie Mae and Freddie Mac buy mortgage loans from banks and repackage them into bonds, which are resold with a guarantee that the principal value of the mortgages will be repaid. The U.S. government takeover initially improved the credit crisis, as all of those questionable bonds were now explicitly guaranteed by the U.S. government.

However, the crisis accelerated as Lehman Brothers sought bankruptcy protection due to massive credit losses. The Lehman Brothers failure inserted panic into the markets which dissipated quickly. In quick succession, AIG, one of the largest insurance companies in the world, was forced to grant the U.S. government a majority stake in the company in return for an emergency loan package, since investors refused to loan it any more money in the event there were more losses buried in its books.

Merrill Lynch sold itself to Bank of America fearing that it would be cut off from the short-term loans it depended on to survive. Morgan Stanley and Goldman Sachs gave up their cherished investment banking status and reorganized into bank holding companies subject to much tighter regulation in return for greater access to central bank funds. Washington Mutual failed and Wachovia sold itself to Wells Fargo. In one month the U.S. housing bust had spread into a crisis of confidence in financial markets.

The impact of the credit crisis began to show in the broader economy during the third quarter. The U.S. unemployment rate climbed to 6.1%, up from 4.7%

a year ago. Industrial production fell, as did personal expenditures. The only bright spot was a moderation in inflation concerns, as declining commodity prices lowered costs for many common products such as gasoline.

The U.S. equity market remained flat in July and August, but September brought a sharp 8.9% decline in the S&P 500, bringing the third quarter return to -8.4% and the 2008 year-to-date return to -19.3%. The financial sector, along with consumer staples and health care stocks, produced a positive return for the quarter, as financial stocks were buoyed by consolidation and government bailouts. Small cap stocks outperformed large cap stocks for the quarter, as the Russell 2000 Index declined 1.1%. Value stocks outperformed growth stocks across all market capitalizations.

International stocks fared significantly worse than U.S. stocks. Non-U.S. markets were down 20.5% and 28.9% for the year-to-date period. The dollar rallied as its status as a safe haven currency drove it higher, another factor hurting non-U.S. returns. Emerging markets performance was even worse, with a -26.9% return for the quarter and a 35.4% loss year-to-date. The spreading economic slowdown heavily impacted those sectors and regions tied to economic growth, such as emerging markets, energy and materials.

The only sectors to generate positive returns for the quarter were U.S. Treasuries and, interestingly, mortgages. The

government takeover of Fannie Mae and Freddie Mac improved the creditworthiness of mortgage securities, reducing their default risk. The broad investment grade bond market returned -0.5% for the

quarter and 0.6% year-to-date. High yield was the worst performing major sector, with a -10.1% third quarter return. Corporate bonds declined

6.4% and municipal bonds fell 3.2%. Non-U.S. government

bonds had a positive return, but after accounting for the appreciation of the U.S. dollar, they returned –3.0%. Commercial mortgage securities and asset backed securities (credit cards, auto loans, etc.) posted their worst quarterly losses on record,

down 5.8% and 3.7%, respectively.

Newsstand

Market­Update

10

Newsstand

Stretch Your Budget: How to Avoid Outliving Your SavingsRetirement is a time to relax, enjoy life… and continue to save. While you should make the most of your retirement, you don’t want to run out of money. Because people have longer life expectancies than ever before, it’s important to

practice wise budget habits — before and after you retire. Here are some ideas to help you avoid outliving your retirement savings.

Work an extra year. The biggest retirement decision is deciding when to retire. Between the ages of 62 and 70 working one more year can raise your annual income 8% to 9% per year, because if you delay claiming your Social Security benefit:

• You are able to save a bit more money,

• Your retirement account has extra time to grow,

• You get higher monthly Social Security payments when you do retire, and

• You reduce the number of years your savings must last.

Cut transportation costs. The typical senior between the ages of 65 and 74 spends $7,481 annually on transportation costs, according to the Labor Department. But this is one of the easiest areas in which to slash costs. Drive less, take public transportation and carpool. Car maintenance, such

as properly inflated tires, tune-ups, oil changes and a new air filter, can decrease fuel costs. Get some exercise and save a few dollars by walking or biking.

Comparison shop. There are lots of little ways to save a few dollars on everyday expenses that can add up over the course of a year. Eat out less often, buy store or generic brands, clip coupons and try bargain hunting for sales.

Replace your furnace filter regularly, keep electronics on a power strip and flip it off when you leave the house. Think about switching all the light bulbs in your house to energy-efficient compact fluorescent bulbs.

Downsize your house. Housing, including mortgage interest, property taxes, maintenance, utilities and furnishings, costs $13,273 annually for the average senior between the ages of 65 and 74, according to the Department of Labor. But housing prices vary greatly by location. If you’re living in an expensive neighborhood, consider moving farther out or into a smaller home. Or you could move to an area with a more affordable cost of living and lower property and income tax rates.

Find low-cost or free activities. Retirees have more leisure time, so entertainment expenses can actually increase during retirement. But you don’t always need to go to a movie. Check out national parks and museums, especially those that offer free or low-cost admission to seniors. Also, ask if there is a senior discount at your favorite stores. Even if they don’t advertise a senior discount, sometimes they’ll give you that 10% off anyway if you just ask.

Retiree­Corner

11

Halliburton Company Employee Benefit Master Trust for the period ended September 30, 2008

Index Composite Balanced Aggressive Moderate ConservativeU.S. stocks 65.0% 70.0% 43.0% 26.0%Russell �000 Index

Non-U.S. stocks — 22.5% 14.0% 9.0%MSCI EAFE Index

Emerging market stocks — 7.5% 5.0% 3.0%MSCI Emerging Market Free Index

U.S. broad market bonds 35.0% — 33.0% 20.0%Lehman Aggregate Bond Index

U.S. high yield bonds — — 5.0% 4.0%Merrill Lynch High Yield Bond Index

iMoneyNet Money Market Fund Average — — — 38.0%

Performance­ 10­Years*­ 5­Years*­ 3­Years*­ 1­Year­ 3rd­Quarter

­PReMIxed­PoRTfolIos­ ­ ­ ­Stable Value Premixed Portfolio 5.7% 5.2% 5.4% 5.6% 1.3%IMoneyNet­Money­Market­fund­Average­ 3.2%­ 2.9%­ 3.9%­ 2.8%­ 0.5%Conservative Premixed Portfolio (CPP) 5.6% 5.7% 3.0% -7.9% -6.0%CPP­Composite­Index­ 4.6%­ 5.1%­ 3.1%­ -8.3%­ -5.1%Moderate Premixed Portfolio (MPP) 5.8% 6.8% 2.4% -16.2% -10.6%MPP­Composite­Index­ 5.3%­ 6.4%­ 2.3%­ -15.1%­ -8.7%Aggressive Premixed Portfolio (APP) 5.5% 8.3% 2.0% -23.7% -14.4%APP­Composite­Index­ 5.0%­ 7.7%­ 1.2%­ -24.4%­ -12.9%

­sINgle­foCUs­fUNds­ ­ ­ ­Bond Index Fund 5.0% 3.7% 4.2% 3.8% -0.4%lehman­Aggregate­Bond­Index­ 5.2%­ 3.8%­ 4.2%­ 3.7%­ -0.5%Balanced Fund 6.4% 7.1% 3.2% -13.8% -8.0%Balanced­fund­Composite­Index­ 4.6%­ 5.2%­ 1.8%­ -13.2%­ -5.8%Large Cap Value Equity Fund 5.3% 6.8% -0.2% -24.3% -8.9%Russell­1000­Value­Index­ 5.5%­ 7.1%­ 0.1%­ -23.6%­ -6.1%S&P 500 Index Fund 3.0% 5.1% 0.1% -22.1% -8.4%s&P­500­Index­ 3.1%­ 5.2%­ 0.2%­ -22.0%­ -8.4%Large Cap Growth Equity Fund 0.5% 4.3% 0.3% -21.9% -15.1%Russell­1000­growth­Index­ 0.6%­ 3.7%­ 0.0%­ -20.9%­ -12.3%Non-U.S. Equity Fund 6.9% 12.8% 5.0% -27.6% -22.3%MsCI­ACWI­ex­U.s.­**­ 5.7%­ 11.2%­ 2.6%­ -30.3%­ -21.9%Mid Cap Equity Index Fund 10.2% 8.6% 1.7% -16.7% -10.8%s&P­MidCap­400­Index­ 10.3%­ 8.7%­ 1.8%­ -16.7%­ -10.9%Small Cap Equity Fund 5.3% 4.7% -1.9% -21.1% -3.9%Russell­2000­Index­ 7.8%­ 8.1%­ 1.8%­ -14.5%­ -1.1%Halliburton Stock Fund 9.6% 22.4% -0.9% -14.7% -38.4%* Annualized.** Returns prior to January 1, 2005, include MSCI EAFE Index, the previous fund benchmark.

General Investment Policy

Fund Performance Update

12

Performance NotesThe Bond Index, Balanced, Large Cap Value Equity, S&P 500 Index, Large Cap Growth Equity, Non-U.S. Equity and Small Cap Equity Funds were not in existence until April 1, 1999. The Mid Cap Equity Index Fund was not in existence until January 1, 2005. The Conservative Premixed Portfolio was introduced January 1, 2006.

In order to provide comparative historical returns, the managers’ return of their Halliburton Trust account is shown. If the Halliburton Trust had not employed a manager for the periods presented, the firm’s composite account return was added. All rates of return are net of expenses. Your rate of return may vary depending on your account activity (e.g., contributions, withdrawals, transfers, loans, etc.) and your plan’s administration expenses.

To help you better understand how your funds are performing, the funds are compared with composite returns or with appropriate indexes. The composites are created by blending together index returns in proportion to the investment policy of each fund (see chart). Because there are no indices comparable to the Stable Value Premixed Portfolio’s investments, we compare its return with money market funds tracked by iMoneyNet.

Performance data represents past performance; no assurance can be made regarding future results.

Index Definitions*

iMoneyNet Money Market Fund Average is an index of over 700 money market funds.

Lehman Aggregate Bond Index is an index of U.S. bonds, including government, corporate, mortgage-backed and asset-backed securities.

Merrill Lynch High Yield Bond Index is an index of U.S. corporate bonds that are rated less than investment grade but are not in default.

MSCI (Morgan Stanley Capital International) All Country World Index (ACWI) ex. U.S. is an index of non-U.S. stock securities listed on the stock exchanges of developed and emerging markets.

MSCI EAFE Index is an index of non-U.S. equity securities listed on the stock exchanges of Europe, Australasia and the Far East.

MSCI Emerging Market Free Index is an index of non-U.S. stocks traded in emerging markets.

Russell 1000 Growth Index focuses on the 1,000 largest companies in the Russell 3000 Index that have lower dividend yields and above-average growth rates.

Russell 1000 Value Index focuses on the 1,000 largest companies in the Russell 3000 Index that have higher dividend yields and below-average growth rates.

Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index.

Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization. It is used as a general measure of U.S. stock market performance.

Standard & Poor’s 500 Index is a popular standard for measuring large-cap U.S. stock market performance. The index includes a representative sample of 500 leading companies in prominent industries.

Standard & Poor’s MidCap 400 Index is a popular standard for measuring mid-cap U.S. stock market performance. The index includes a representative sample of 400 leading companies in prominent industries with a market capitalization of approximately $1 – $4 billion.

* You cannot invest in any of these indices. Fund holdings will differ from index holdings.

For account information, go to Your Benefits Resources at http://resources.hewitt.com/halliburtonbenefits or call the Benefits Center automated telephone system at 1-800-535-8130.

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