Interactive Efficient Frontier Monte Carlo Wealth Graph

Portfolio Comparison

Morningstar® Principia® Asset Allocation

Efficient FrontierFeatures Include3 Interactive graph3 Editable market assumptions3 Editable constraints3 Custom Asset Classes

Monte CarloVariables Include3 Ongoing savings rate3 Social Security3 Retirement needs3 Inflation3 Tax rates

Principia Asset Allocation module can help you build better portfolios. Portfolios that give your clients the best chance of achieving the highest return for a given level of risk. And Asset Allocation doesn’t give “cookie cutter” results—its analysis includes factors such as inflation, taxes, and ongoing savings to ensure that your clients’ long-term needs and objectives will be met.

Import Portfolios and Determine Risk ToleranceImport portfolios directly from Principia’s portfolio mode into Asset Allocation to survey a client’s currentsituation. Then quickly assess the client’s risk tolerance using Morningstar’s risk questionnaire.

Generate an Efficient Frontier GraphWith a clear picture of a client’s current holdings and risk tolerance, you can generate an efficient frontier graph. It’s based on 13 separate asset classes—including commodities and REITs—and helps you determine the optimal portfolio for any given risk level.

You can create efficient frontier graphs using the default Ibbotson assumptions for pre-tax returns, standard devia-tion, and correlation between each asset class, or you can incorporate your assumptions. You also have the option of including your own custom asset classes

Compare Current and Target PortfoliosOnce you’ve selected the asset mix that’s most appro- priate for your client’s needs, create a detailed comparisonof the current portfolio versus the new target portfolio.

Run a Monte Carlo SimulationTest an allocation with advanced Monte Carlo capa-bilities that allow you to run sophisticated simulationsthat forecast expected wealth, based on a client’s specific cash flows, tax burden, and time horizon. Perform wealthanalysis for different scenarios and refine the plan by altering factors such as inflation, taxes, ongoing savings,and retirement needs to meet a client’s wealth goals.

©2007. Morningstar Research Inc. All rights reserved. Morningstar and the Morningstar logo are either trademarks or service marks of Morningstar, Inc.

©2007. Morningstar Research Inc. All rights reserved. Morningstar and the Morningstar logo are either trademarks or service marks of Morningstar, Inc.

Morningstar® Principia® Asset Allocation

Optimize Your PortfolioImport a list of securities, then use the auto-allocate feature to diversify a client’s holdings among them. You can choose to allocate funds by minimizing tracking error or by maximizing alpha.

Create an Action planOnce you’ve determined the asset allocation, presentan action plan to the client. Show which holdingsyou propose to buy and sell in the clear and easy-to-understand Asset Allocation Report. This customizablereport helps you explain the proposed changes, aswell as the assumptions used to forecast the client’sfuture wealth.

An Integrated SolutionThe Asset Allocation module integrates with Principia’sresearch modules (mutual funds, stocks, variableannuities/life subaccounts, seperately managed accounts, and closed-end funds).

This powerful new addition greatly expands the capa-bilities of the Principia lineup. Use it to createsound, comprehensive investment plans and to presentcompelling “before and after” scenarios to clients and prospects.

Call 1 866 812-5192, For More InformationTo learn more about the Asset Allocation module, orfor a product demonstration, please call 1 866 812-5192or visit http://global.morningstar.com/PrincipiaAA

Portfolio Value $ Target Asset Allocation: 5% 25% 75% 95% Median Current Portfolio Median

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1M

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10K

1K

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Portfolio Comparison ReportAsset Allocation Report

Asset Allocation Report3 Fully customizable3 Add your firm logo to coverpage3 Generate in Adobe PDF3 Appendix includes disclosures

and capital market assumptions