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Portfolio Performance

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Portfolio Performance

  1. 1. Portfolio Performance
  2. 2. What is Asset Allocation? <ul><li>© 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>Asset allocation is the process of combining asset classes such as stocks, bonds, and cash in a portfolio in order to meet your goals. Stocks Bonds Cash
  3. 3. Long-Term Portfolio Performance 1926–2009 <ul><li>Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of 1926. 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. © 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>9.8% 9.1 8.0 6.8 5.3 Compound annual return $10,000 1,000 100 10 1 0.10 1926 1936 1946 1956 1966 1976 1986 1996 2006 $2,592 $1,452 $667 $252 $79 • Portfolio 1 (100% Stocks) • Portfolio 2 (75% Stocks, 25% Bonds) • Portfolio 3 (50% Stocks, 50% Bonds) • Portfolio 4 (25% Stocks, 75% Bonds) • Portfolio 5 (100% Bonds)
  4. 4. 20-Year Portfolio Performance 1990–2009 <ul><li>Past performance is no guarantee of future results. Hypothetical value of $1 invested at the beginning of 1990. 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. © 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>$4.74 $4.84 $4.48 $4.11 $3.65 $10 5 0.80 8.2% 8.1 7.8 7.3 6.7 Compound annual return • Portfolio 1 (100% Stocks) • Portfolio 2 (75% Stocks, 25% Bonds) • Portfolio 3 (50% Stocks, 50% Bonds) • Portfolio 4 (25% Stocks, 75% Bonds) • Portfolio 5 (100% Bonds) 1 1990 1995 2000 2005
  5. 5. Portfolio Summary Statistics Rolling periods 1926–2009 <ul><li>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. © 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>162.9% 118.7% 77.8% 40.9% 32.7% – 67.6% – 55.7% – 40.7% – 22.0% – 5.6% 27.0% 24.5% 19.8% 11.8% 8.4% 36.1% 29.0% 22.2% 20.0% 19.5% – 17.4% – 11.5% – 6.1% – 1.2% 0.7% 13.0% 8.0% 5.1% 0.3% 0.0% 21.4% 17.7% 16.2% 14.9% 13.7% – 4.9% – 1.3% 1.5% 3.3% 1.2% 4.8% 1.0% 0.0% 0.0% 0.0% 9.8% 9.1% 8.0% 6.8% 5.3% Highest return Average return Lowest return Negative periods Highest return Lowest return Negative periods Highest return Lowest return Negative periods 12-month holding period 60-month 120-month 50% 50% • Stocks • Bonds 100% 25% 75% 75% 25% 100%
  6. 6. Diversification May Lessen the Impact of Market Swings <ul><li>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. © 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>Highest return Lowest return (100% Stocks) (75% Stocks, 25% Bonds) (25% Stocks, 75% Bonds) (100% Bonds) (50% Stocks, 50% Bonds) • Portfolio 1 • Portfolio 2 • Portfolio 4 • Portfolio 5 • Portfolio 3 10.1 9.1 6.8 5.5 37.6% 23.0 33.4 28.6 21.0 12.6 7.6 12.9 28.7 10.9 4.9 32.1 17.5 26.9 24.4 15.1 7.0 2.9 3.6 21.8 8.7 4.1 26.8 12.2 20.5 19.9 9.3 1.5 – 2.0 – 5.3 15.1 6.6 3.2 21.7 7.1 14.4 15.1 3.7 – 3.9 – 6.9 – 13.9 8.6 4.4 2.3 16.8 2.1 8.4 10.2 – 1.8 – 9.1 – 11.9 – 22.1 2.4 2.3 1.4 15.8 12.5 9.3 6.2 3.1 8.0 13.1 – 1.5 – 26.4 – 37.0 – 14.6 26.5 19.1 4.6 – 2.4 11.7 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
  7. 7. Portfolio Risk Appears to Diminish Over Time 1926–2009 <ul><li>Past performance is no guarantee of future results. Each bar shows the range of rolling returns for each asset class over the period 1926–2009. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>– 100 – 50 0 50 100 150 200% 75% Stocks/25% Bonds 50% Stocks/50% Bonds 25% Stocks/75% Bonds 100% Bonds 100% Stocks 9.8% 9.1% 8.0% 6.8% 5.3% • 12-month holding periods • 60-month holding periods • 120-month holding periods return Compound annual
  8. 8. Stocks and Bonds: Risk Versus Return 1970–2009 <ul><li>Past performance is no guarantee of future results. Risk and return are measured by standard deviation and arithmetic mean, respectively. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2010 Morningstar. All Rights Reserved. 3/1/2010 </li></ul>12% Return 11 10 9 Maximum risk portfolio: 100% Stocks 60% Stocks, 40% Bonds 50% Stocks, 50% Bonds 100% Bonds Minimum risk portfolio: 28% Stocks, 72% Bonds 80% Stocks, 20% Bonds 11 12 13 14 15 16 19 17 18 10% Risk

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