Morningstar Advisor Catalog 2008 - 6

The Market Charts Kit includes the 12 charts below, as well as those shown on page 5. Ibbotson SBBI Stocks, Bonds, Bills, and Inflation 1926–2007 $15,091 10,000 Dangers of Market Timing Hypothetical value of $1 invested from 1926–2007 $3,500 $10 $3,246 Hypothetical value of $1 invested from 1988–2007 $9.33 $3,246 3,000 1,000 Compound Annual Return Small Stocks Large Stocks Long-Term Govt Bonds Treasury Bills Inflation 12.5% 10.4 5.5 3.7 3.0 2,500 0 $2.36 $2.41 100 $79 2,000 Stocks Stocks missing best 18 months Treasury Bills $20 $12 10 $10 1,500 Hypothetical value of $1 invested from 1998–2007 1,000 $1 Start of low inflationary period Fed targets monetary supply May Day, the deregulation of brokerage fees Crude oil hits high of $98.18 Tet offensive in Vietnam Glass-Steagall Act Securities Exchange Act Gramm-Leach-Bliley Act General Agreement on Tariffs and Trade 500 $1.78 $19.23 0 Stocks Stocks missing best 40 months $1.09 $1.42 U.S. Treasury-Federal Reserve Accord Stock market crash Stock market crash JFK assassinated Sputnik launched Arab oil embargo Start of Gulf War Pearl Harbor September 11th $20.19 Treasury Bills 0 Stocks Stocks missing best 6 months Treasury Bills 0.10 1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 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. 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 1926-2007 Dangers of Market Timing Ibbotson SBBI After Taxes 1926–2007 1,000 $500,000 Potential Shortfall: The Risk of High Withdrawal Rates Annual inflation-adjusted withdrawal as a % of initial portfolio wealth $644.22 400,000 100 Compound Annual Return Stocks Municipal Bonds Government Bonds Inflation Treasury Bills 8.2% 4.4 3.5 3.0 2.3 $33.48 $16.33 $11.72 300,000 10 $6.43 200,000 Top marginal income tax rate 33% and realized capital gains taxable as ordinary income $1 Top marginal income tax rate 70% Top marginal income tax rate 35% and long-term capital gains lowered to 15% Top marginal income tax rate 39.6% Top marginal income tax rate raised to 92% during Korean War Investment tax credit first enacted Separate rates for single people and married couples adopted Govt employees no longer exempt from federal income tax Federal government stops issuing tax-free bonds Top marginal income tax rate 50% Minimum tax imposed at 10% of selected preference income Top marginal income tax rate raised to 94% during WWII Standard deduction adopted Employee Retirement Income Security Act (ERISA) enacted 100,000 Top marginal rate lowered from 91% to 77% Crude Oil Windfall Profit Tax Act of 1980 0.10 Long-term capital gains rate lowered to 20% Top marginal income tax rate 25% COBRA enacted Withdrawal Rate: 2005 1973 1974 1975 1976 1977 1978 1979 1980 9% 1981 8% 1982 1983 7% 1984 1985 1986 6% 1987 1988 1989 1990 1991 1992 1993 5% 1994 1995 1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 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. 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. Ibbotson SBBI after Taxes 1926-2007 Potential Shortfall: The Risk of High Withdrawal Rates Ibbotson SBBI After Taxes and Inflation 1926–2007 100 Portfolio Performance 1926–2007 Range of 12-Month Rolling Returns 150% 127.3% 110.3% 100 62.5% 47.9% 50 32.7% 30.8% 34.0% Avg Positive Return 93.8% 77.8% 162.9% 144.9% Compound Annual Return Stocks Municipal Bonds Government Bonds Treasury Bills 5.0% 1.3 0.4 –0.7 $54.98 10 0 –5.6% –10.2% Avg Negative Return –17.8% –26.1% –33.7% –50 –40.7% –47.1% $2.86 –52.9% –58.3% –63.1% –67.6% Percent of Positive/Negative 12-Month Rolling Periods $1.39 $1 100% Positive Negative 50 $0.55 Top marginal income tax rate 33% and realized capital gains taxable as ordinary income 8.5% 8.3% 10.0% 13.2% 16.4% 18.7% 20.1% 22.3% 23.7% 24.6% 25.5% Top marginal income tax rate 35% and long-term capital gains lowered to 15% Top marginal income tax rate 39.6% Top marginal income tax rate raised to 92% during Korean War Investment tax credit first enacted Top marginal income tax rate 70% Separate rates for single people and married couples adopted Govt employees no longer exempt from federal income tax Federal government stops issuing tax-free bonds Top marginal income tax rate 50% Minimum tax imposed at 10% of selected preference income Top marginal income tax rate raised to 94% during WWII Standard deduction adopted Employee Retirement Income Security Act (ERISA) enacted Top marginal rate lowered from 91% to 77% Crude Oil Windfall Profit Tax Act of 1980 0.10 Long-term capital gains rate lowered to 20% Top marginal income tax rate 25% 4.61 5.34 4.80 6.00 5.76 6.63 7.21 7.23 8.94 7.79 10.82 8.31 12.80 8.80 14.86 9.25 16.99 9.66 19.17 10.03 21.39 10.36 Standard Deviation Compound Annual Return COBRA enacted 1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 100% Bonds 90%B | 10%S 80%B | 20%S 70%B | 30%S 60%B | 40%S 50%B | 50%S 40%B | 60%S 30%B | 70%S 20%B | 80%S 10%B | 90%S 100% Stocks 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. 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 1926-2007 Portfolio Performance 6 Communication
Morningstar Advisor Catalog 2008

Table of Contents for the Digital Edition of Morningstar Advisor Catalog 2008
