Ibbotson Associates, Inc.

Professor Roger B. Ibbotson founded Ibbotson Associates in 1977 to help fill the gap between modern financial theory and real world investment practices.

The data collected and used by Ibbotson Associates quantifies the benefit of diversification and market risk reduction through asset allocation. Lincoln Investment Planning, Inc. contracted with Ibbotson Associates to design allocation models across a typical investor's risk continuum. Lincoln Investment applies these models to the mutual fund families available within Retirement and Investor SOLUTIONS.

Ibbotson Strategic Allocation is a risk management program based on modern portfolio theory. The program seeks to apply science and discipline to its goal of reducing risk for a given amount of return.

• Science: Modern Portfolio Theory
  

  Modern Portfolio Theory, the foundation of Ibbotson Strategic Allocation, is a long-term approach to investing that mixes fundamental asset classes into targeted portfolios. Factors used to determine asset class allocations include:

  • Expected return of the asset class
  • Risk and volatility of the asset class
  • Correlation among asset classes
  
  
• Discipline: Semi-Annual Rebalancing
  

  The goal of Ibbotson Strategic Allocation is not to enhance performance but to help reduce risk. As your initial target portfolio is affected by the normal volatility (ups and downs) of the stock, bond and international markets, the allocations of each asset class will shift slightly, which could potentially increase the risk within your portfolio.

  By rebalancing your portfolio twice each year (typically June and December), the risk level of each portfolio is reset to its original target risk level. An example of this shifting and subsequent rebalancing is provided below.

This approach should appeal to investors who:

• Wish to maintain a consistent risk level to their investment portfolio
• Wish to be invested in a variety of asset classes regardless of current market conditions