Capital Markets Charts 2004 Series

Capital Markets Charts 2004 Series (Performance Charts) Charts 1 15 Reminder: You must include the Glossary of Indices and disclosure pages with all charts you select to use, either individually or as a group. Information as of December 31, 2003 unless otherwise noted

Asset Class Returns Annualized Rates of Return 1926-2003 14% 12.67 12% 10.42 10% 8% 6% 4% 5.89 5.40 3.75 3.03 2% 0% Small Stocks Large Stocks Lt Corp Bonds T-Bills Lt Govt Bonds Inflation Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Stocks represent ownership in a company and are not guaranteed, and have been more volatile than other asset classes. The prices of small company stocks are generally more volatile than those of large company stocks. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. The power of common stocks is apparent when viewed in terms of the average annual return for each of these classes. Stocks represent ownership in a company, are not guaranteed and have been more volatile than other asset classes. Small stocks provided an impressive 12.67% annualized return and large stocks returned 10.42%, more than double the 5.40% for government bonds and 3.75% for Treasury bills. Over the same period, inflation grew at 3.03% annual rate.

Index Values (USD) $100,000 Asset Class Returns Growth of a Dollar 1926 to 2003 $10,000 $1,000 10,953.9 2,284.8 $100 $10 86.8 60.6 17.7 10.3 $1 $0 Dec-00 Dec-95 Dec-90 Dec-85 Dec-80 Dec-75 Dec-70 Dec-65 Dec-60 Dec-55 Dec-50 Dec-45 Dec-40 Dec-35 Dec-30 Dec-25 S&P 500 TR U.S. Small Stk TR U.S. LT Corp TR U.S. LT Gvt TR U.S. 30 Day TBill TR U.S. Inflation Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. The power of common stock is apparent when viewed in terms of the growth of a dollar in each of these asset classes. One dollar invested in small stocks grew to $10,953.90 in 77 years and a dollar in large stocks grew to $2,284.80. The results for bonds are drastically different. Of course, bonds have less inherent volatility.

Asset Class Returns Annualized Rates of Return with International 1970-2003 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 14.03% 11.30% 10.82% 9.15% 9.41% 6.26% Large Stocks Small Stocks International Stocks Lt Govt Bonds T-Bills Lt Corp Bonds 4.78% Inflation Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Foreign investing is subject to certain risks, such as currency fluctuation and social and political changes. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. The power of common stocks is apparent when viewed in terms of the average annual return for each of these classes. Since 1970, small stocks provided an impressive 14.03% annualized return and large stocks returned 11.30%. International stocks returned 10.82% while corporate bonds registered in at 9.41%. Treasury bills came in at 6.26%. Over the same period, inflation grew at 4.78% annual rate. Stocks represent ownership in a company, are not guaranteed and have been more volatile than other asset classes.

Index Value s (USD) $100 $10 Growth of a Dollar with International 1970 to 2003 86.8 38.0 32.9 21.2 19.6 7.9 $1 $0 1977 1975 1973 1971 1969 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 4.9 2003 S&P 500 TR U.S. Small Stk TR U.S. Inflation U.S. LT Corp TR MSCI EAFE TR U.S. LT Gvt TR U.S. 30 Day TBill TR Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. The power of common stock is apparent when viewed in terms of the growth of a dollar in each of these asset classes. Since the inception of the MSCI EAFE international index in 1970, one dollar invested in small stocks grew to $86.80 in 33 years and a dollar invested in large stocks grew to $38.00 both significantly higher than the results for bonds. Of course, bonds have less inherent volatility. Stocks as a percentage of ownership in a company offer growth potential, but fluctuate more than bonds and offer little or no current income.

10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 9.35% Small Stocks Asset Class Returns After Inflation 1926-2003 7.17% Large Stocks 2.77% Lt Corp Bonds 2.30% Lt Govt Bonds 0.70% T-Bills Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Stocks offer long-term growth potential but may fluctuate more and provide less current income than other investments. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. This chart conveys the impact of inflation on investment returns. Even so, both large & small stocks have returned far better than any other asset class since 1926. Keep in mind, stocks offer long term growth potential but may fluctuate more and provide less current income than other investments. Small company stocks are generally more volatile than large company stocks.

Asset Class Returns Growth of a Dollar - After Inflation 1926 to 2003 Index Values (USD) $10,000 $1,000 $100 $10 $1 $0 Dec-46 Dec-43 Dec-40 Dec-37 Dec-34 Dec-31 Dec-28 Dec-25 Dec-70 Dec-67 Dec-64 Dec-61 Dec-58 Dec-55 Dec-52 Dec-49 Dec-97 Dec-94 Dec-91 Dec-88 Dec-85 Dec-82 Dec-79 Dec-76 Dec-73 1,065.4 222.2 8.4 5.9 1.7 Dec-03 Dec-00 S&P 500 Infl-Adj TR U.S. Small Stk Infl-Adj TR U.S. LT Corp Infl-Adj TR U.S. LT Gvt Infl-Adj TR U.S. 30 Day TBill Infl-Adj TR Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. The power of common stock is apparent when viewed in terms of the growth of a dollar in each asset classes, even after inflation. One dollar invested in small stocks grew to $1,065.40 in 77 years and a dollar in large stocks grew to $222.20. The results for bonds are drastically different. Of course, bonds have less inherent volatility.

Asset Class Returns -Various Periods Annualized Returns Ending 12/2003 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% 5 Years 10 Years 20 Years 30 Years 40 Years 50 Years 60 Years 70 Years S&P 500 TR U.S. Small Stk TR U.S. LT Corp TR U.S. LT Gvt TR U.S. 30 Day TBill TR Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. Clearly, in most time periods shown, stocks both large and small have beaten other asset classes in total return. One can also see that over longer periods, small cap stocks have outperformed large cap stocks. However, there is more volatility associated with those returns. Past performance does not guarantee future results.

Style Returns for Various Periods 1993 to 2003 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Large Cap Growth Large Cap Value Mid Cap Growth Mid Cap Value Small Cap Growth Small Cap Value The prices of small company stocks are generally more volatile than those of large company stocks. Stocks offer long-term growth potential but may fluctuate more and provide less current income than other investments. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Past performance is not indicative of future results. Individual investor results will vary. Large Cap Growth - R1000G; Large Cap Value - R1000V ; Mid Cap Growth R MidCap Growth; Mid Cap Value R MidCap Value; Small Cap Growth R2000G; Small Cap Value R2000V See Glossary of Indices for index descriptions. This chart indicates the importance of being diversified among various asset classes and styles. Some times asset class returns will move together, however, as seen in most recent years, being diversified is critical to help reduce portfolio volatility and preserve capital.

20 18 16 14 12 10 8 6 4 2 0-2 Asset Class Returns by Decade 50's 60's 70's 80's 90's S&P 500 TR U.S. Small Stk TR U.S. LT Corp TR U.S. LT Gvt TR U.S. 30 Day TBill TR Government bonds and Treasury Bills are guaranteed by the U.S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. The prices of small company stocks are generally more volatile than those of large company stocks. Stocks represent ownership in a company and are not guaranteed and have been more volatile than other asset classes. Corporate bonds are debts of the company and are backed by the claims paying ability of the issuer. Past performance is not indicative of future results. Individual investor results will vary. See Glossary of Indices for index descriptions. Stocks (large & small) were the winning asset class in every decade since 1950's. Specifically in the 1950s, 1980s, and 1990s stocks provided especially strong performance.

% Return Major Stock Market Advances Since 1950 60 52.62 50 43.36 S&P 500 40 30 26.89 23.89 22.51 31.49 37.43 33.36 28.58 21.04 28.70 20 10 0 1954 1958 1961 1976 1983 1989 1995 1997 1998 1999 2003 This illustration is provided for informational purposes only. It is not intended to represent any specific investment, and is not indicative of future performance. Investors can not directly purchase any index. See Glossary of Indices for index descriptions. This chart indicates those years where the S&P 500 index had returned at least 20%. Notice the 1990 s experienced several good years of solid returns for the S&P 500.

% Return Major Stock Market Declines Since 1950 0-5 -10-15 -10.78-8.73-10.06-8.5-14.66-7.18-9.11-11.88-20 S&P 500-25 -30-26.47 1957 1962 1966 1969 1973 1974 1977 2000 2001 2002-22.1 This illustration is provided for informational purposes only. It is not intended to represent any specific investment, and is not indicative of future performance. Investors can not directly purchase any index. See Glossary of Indices for index descriptions. This chart indicates certain years since 1950 where the S&P 500 had negative returns.

Equity Returns 1 - Year Holding Periods S&P 500 1926-2003 60% 40% 20% 0% -20% -40% -60% 1926 1933 1940 1947 1954 1961 1968 1975 1982 1989 1996 2003 Past performance is not indicative of future results. Individual investors cannot directly purchase an index. See Glossary of Indices for index descriptions. On a year-to-year basis, the equity market can be quite volatile. This chart shows each year s performance since 1926. Over one year periods the markets can be unpredictable.

Equity Returns 5 - Year Holding Periods S&P 500 1926-2003 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% 2000 1998 1996 1990 1992 1994 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970 1968 1966 1964 1962 1960 1958 1956 1954 1952 1950 1948 1946 1944 1942 1940 1938 1936 1934 1932 1930 2002 2003 Past performance is not indicative of future results. Individual investors cannot directly purchase an index. See Glossary of Indices for index descriptions. Over long periods of time, equities become a more stable investment. Looking at rolling 5-year periods, there was a higher probability of having consistent positive returns. Past performance is no guarantee of future results..

Equity Returns 10 - Year Holding Periods S&P 500 1926-2003 25% 20% 15% 10% 5% 0% -5% 2003 2001 1997 1999 1995 1991 1993 1989 1985 1987 1983 1981 1979 1977 1973 1975 1969 1971 1967 1963 1965 1961 1957 1959 1955 1951 1953 1949 1945 1947 1943 1939 1941 1937 1935 Past performance is not indicative of future results. Individual investors cannot directly purchase an index. See Glossary of Indices for index descriptions. Over long periods of time, equities become more stable investments. Looking at 10-year time periods, there was a much higher probability of having consistent positive returns.

20% Equity Returns 15 - Year Holding Periods S&P 500 1926-2003 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2003 2000 1997 1994 1991 1988 1985 1982 1979 1976 1973 1970 1967 1964 1961 1958 1955 1952 1949 1946 1943 1940 Past performance is not indicative of future results. Individual investors cannot directly purchase an index. See Glossary of Indices for index descriptions. Over 15-year holding periods there was not a single losing period, even including the depression. With a longer time horizon, the investor has a much greater chance of obtaining the equity results that an asset allocation mix is designed to produce. However, most investors have difficulty accepting even a three-to five-year time horizon, let alone a longer one.

Glossary of Indices The indices are presented to provide you with an understanding of their historic long-term performance, and are not presented to illustrate the performance of any security. Investors cannot directly purchase any index. Past performance is not indicative of future results. Individual investor results will vary. Inflation: The Consumer Price Index for all Urban Consumers (CPI-U), not seasonally adjusted, is used to measure inflation, which is the rate of change of consumer good prices. All of the security returns are measured from one month-end to the next month-end. CPI commodity returns are collected during the month. Thus, measured inflation rates lag the other series by about one-half month. Prior to January 1978, the CPI (as compared with CPI-U) was used. Both inflation measures are constructed by the U.S. Department of Labor, Bureau of Labor Statistics. International Stocks: The returns for International Stocks are based on the Morgan Stanley Capital International Europe, Australia, Far East Index (MSCI EAFE) for the period 1970-2003. MSCI EAFE is a market value-weighted average of over 900 securities listed on stock exchanges in the developed countries in the regions listed above. The index includes reinvestment of gross dividends before deduction of withholding taxes. Large Stocks: The large stock total return index is based upon the Standard and Poor s composite index. The S&P 500 is an unmanaged weighted index of 500 stocks providing a broad indicator of price movement. Lehman Brothers Credit Bond Index: Composed of all publicly issued, fixed rate, nonconvertible, and investment-grade corporate debt. Issues are rated at least Baa by Moody s Investors Service or BBB by Standard & Poor s, if unrated by Moody s. Collateralized Mortgage Obligations (CMO s) are not included. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. Lehman Brothers Credit - Intermediate Bond Index: A subset of the Lehman Brothers Corporate Bond Index covering all corporate, publicly issued, fixed-rate, nonconvertible US debt issues rated at least Baa by Moody s or BBB by Standard & Poor s with at least $50 million principal outstanding and maturity greater than 10 years. Lehman Brothers Government Bond Index: Composed of all publicly issued, nonconvertible, domestic debt of the US Government or any agency thereof, quasifederal corporations, or corporate debt guaranteed by the US Government, flower bonds and pass-through issues are excluded. Total return compromises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization. Lehman Brothers Government Intermediate Bond Index: Composed of all publicly issued, nonconvertible, domestic debt of the US Government or any agency thereof, quasi-federal corporations, or corporate debt guaranteed by the US Government, flower bonds and pass-through issues are excluded, with maturities between one and 9.99 years. Total return compromises price appreciation/depreciation and income as a percentage of the original investment. Indices are rebalanced monthly by market capitalization.

Glossary of Indices (continued from previous page) Long-Term Corporate Bonds: For 1969-2003, corporate bond total returns are represented by the Salomon Brothers Long-Term High Grade Corporate Bond Index. The index includes nearly all Aaa and Aa rated bonds. Over 1926-1968, the total returns were calculated by summing the capital appreciation returns and the income returns. For the period 1946-1968, Ibbotson and Sinquefeld backdated the Salomon Brothers Index, using Salomon Brothers monthly yield data with a methodology similar to that used by Salomon for 1969-1991. Capital appreciation returns were calculated from yields assuming a 20-year maturity, a bond price equal to par, and a coupon equal to the beginning of the period yield. For the period 1926-1945, the Standard & Poor s monthly High Grade Corporate Composite Yield data were used, assuming a 4% coupon and a 20-year maturity. The conventional present value formula for bond price was used for the beginning and end of the month prices. Long-Term Government Bonds: The total returns on long-term government bonds from 1977-2003 are constructed with data from the Wall Street Journal. Over 1926-1976, data are obtained from the Government s file at the Center for Research in Security Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a one-year bond portfolio with a term of approximately 20 years and a reasonably current coupon and whose returns did not reflect potential tax benefits, impaired negotiability, or special redemption or call privileges, was used. Where callable bonds had to be used, the term of the bond was assumed to be a simple average of the maturity and first call dates minus the current date. The bond was held for the calendar year and returns were computed. NAREIT Share Price Equity Index: All of the data is based upon the last closing price of the month for all tax-qualified REITs listed on the New York Stock Exchange, American Stock Exchange, and the NASDAQ National Market System. The data is market weighted. The total return calculation is based upon the weighting at the beginning of the period depending upon whether it is one month, three months, or 12 months. Only those REITS listed for the entire period are used in the total return calculation. Dividends are included in the month based upon their payment date. There is no smoothing of income. Liquidating dividends, whether full or partial, are treated as income. This has the effect of negatively biasing the price appreciation component of the index but results in accurate realized income and total return numbers. The annualized return numbers are market weighted with the most recent dividend annualized plus any extraordinary dividends included, divided by the most recent price Russell 3000 Index: The Russell 3000 Index is composed of the 3,000 largest US securities, as determined by total market capitalization Russell 2000 Index: Consists of the smallest 2,000 securities in the Russell 3000 Index. This is the Frank Russell Company s small capitalization index that is widely regarded in the industry as the premier measure of small capitalization stocks. Russell 1000 Index: Consists of the 1,000 largest securities in the Russell 3000 Index. This large capitalization (market-oriented) index represents the universe of stocks from which most active money managers typically select. The Russell 1,000 is highly correlated with the S&P 500 Index. Russell 1000 Growth: Measures the performance of those Russell 1000 Companies with higher price-to-book rations and higher forecasted growth values. Russell 1000 Value: Measures the performance of those Russell 1000 companies with lower price-to-book rations and lower forecasted growth values Russell Midcap Index: Measures the performance of the 800 smallest companies in the Russell 1000 Index.

Glossary of Indices (continued from previous page) Russell 2000 Value Index: Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index consists of the smallest 2,000 securities in the Russell 3000 Index. The Russell 3000 Index is composed of the 3,000 largest U.S. securities, as determined by total market capitalization. Russell 2000 Growth Index: Measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index consists of the smallest 2,000 securities in the Russell 3,000 Index. Small Stocks: For 1982-2003, the small company stock return series is the total return achieved by the Dimensional Fund Advisors (DFA) Small Company 9/10 Fund. This fund is a market value-weighted index of the ninth and tenth deciles of the New York Stock Exchange (NYSE), plus stocks listed on the American Stock Exchange (AMEX) and over the counter (OTC) with same or less capitalization as the upper bound of the NYSE ninth decile. The equities of smaller companies from 1926-1980 are represented by the historical series developed by Professor Rolf W. Banz. This is composed of stocks making up the fifth quintile of the NYSE. For 1981, Dimensional Fund Advisors, Inc. updated the returns using Professor Banz s methods. S & P 500 Index: The S&P Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock s weight in the Index proportionate to its market value. The 500 is one of the most widely used benchmarks of US equity performance. S&P BARRA Growth and Value Indices: Companies in each US index are split into two groups based on price-to-book ratio to create growth and value indices. The Value index contains companies with lower price-to-book ratios, while the Growth index contains those with higher ratios. T-Bills: For the U.S. Treasury Bill Index, data from the Wall Street Journal are used form 1977-2003; the CRSP U.S. Government Bond File is the source until 1976. Each month, a one-bill portfolio containing the shortest-term bill having not less than one month to maturity is constructed. To measure holding period returns for the one-bill portfolio, the bill is priced as of the last trading day of the current month. Source: Ibbotson Associates, Chicago Revised 02/04 Disclosures Government bonds and Treasury bills are guaranteed by the US Gov t and, if held to maturity, as with all bonds offer a fixed rate of return and principal. Stocks are not guaranteed, represent ownership in a company and offer long term growth potential but may fluctuate more and provide less current income than other investments. Standard deviation represents the amount, over a period of time, that a portfolio s return deviates from the mean or average annual return that the portfolio has Experienced. The price of small company stocks generally are more volatile than those of large company stocks. Managed Accounts Consulting Group Is affiliated with Prudential Investments LLC.