Charles County Government, County Commissioners Presentation

Presented by: Anton Tansil, Relationship Manager Dean Molinaro, Investment Consultant Patrick Landry, Actuarial Advisor

May 1, 2007

For Plan Sponsor Use Only PRUDENTIAL RETIREMENT. INTELLIGENT SOLUTIONS WORKING FOR YOU.

County Commissioners of Charles County, Maryland Investment Products & Advisory Services } Performance Results as of December 31, 2006 Presented by: Dean M. Molinaro, Vice President

F O U R T H Q U A R T E R 2 0 0 6 | INVESTMENT REVIEW FOR PLAN SPONSOR USE ONLY: NOT FOR USE BY PARTICIPANTS FOURTH QUARTER 2006 VALUE PROPOSITION

Value Proposition

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 2 FOURTH QUARTER 2006 VALUE PROPOSITION

Our Commitment

Prudential acknowledges it is a fiduciary within the meaning of the ERISA* with respect to the operation of the Separate Accounts including the institutionally managed funds

We agree to indemnify our clients for both the: • selection, oversight, and de-selection of the registered investment advisor • selection and oversight of alliance mutual fund advisors**

* Employee Retirement Security Act of 1974, as amended **Change left to plan sponsor discretion

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 3 FOURTH QUARTER 2006 VALUE PROPOSITION

A Secure Retirement Model

Minimizing Bottom Striving for Consistent Quartile Exposure Performance* Manager of Managers Top 2 Quartiles professional Positive - 69% Performance oversight Participant - -69% Risk - Adjusted Outcomes

Asset Allocation Tools Equip participants to make informed decisions

*Institutional funds for the 5 years ended December 31, 2006. Past performance is no guarantee of future results.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 4 FOURTH QUARTER 2006 VALUE PROPOSITION

Upside Participation, Downside Protection

Disciplined, objective manager selection process

Qualifying criteria (AUM > $250 million) 5+ years of history, active management

Capitalization / style map High correlation to index

Objective risk-return criteria Weighted scorecard

Historical / financial soundness Team consistency / Depth of resources

Balance of Qualitative and Quantitative criteria produce sub-advised management options

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 5 FOURTH QUARTER 2006 VALUE PROPOSITION

Fortune 100 Resources Working for You

• Product Management and Retirement Expertise Research – 11

• Investment Consulting – 15

• 500+ management visits last year

• $110+ Billion of assets under research

• Highly Credentialed

– 9 years average experience

– 8 years average PRU experience

– 26 CFA Charterholders

– 33 MBAs, 2 JDs

*as of December 31, 2006

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 6 FOURTH QUARTER 2006 MARKET COMMENTARY

Market Commentary

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 7 FOURTH QUARTER 2006 MARKET COMMENTARY

Economic Review

• Broad market indexes closed 2006 with another strong quarter. • The Dow Jones Industrials set a new all-time high of 12,510 (the old mark was 11,723 from 1/14/00). At quarter end, the S&P 500 was 1418, still 7% below its all-time high of 1527 (3/24/00), and the NASDAQ at 2415 was more than 50% under its high of 5132 (3/10/00). • Oil prices ended the year at $61, significantly below their 2006 high of $78 per barrel. • The weakest sector by far within the U.S. economy during 2006 was the residential real estate market. Following five years of unprecedented growth, all key measures of housing activity declined sharply during 2006, including housing starts, building permits, housing sales, and new mortgage applications. • The spectacular rebound in corporate profits that began in 2002 continued in 2006, with earnings growth of 15% for the full year. • Perhaps the biggest surprise of 2006 was the speed and degree to which inflationary pressures subsided during the second half of the year in response to the first hint of slower growth in aggregate spending. The relatively mild increase in consumer inflation in recent years has been truly remarkable in view of the wide range of massive inflationary pressures: surging commodity and energy prices; a global economic boom; excess global liquidity; and a sharp decline in the U.S. dollar. • Core inflation, excluding energy and food prices, has been easing, but is still above the 2% rate that Fed Chairman Ben Bernanke considers the upper limit of the tolerable.

Source: Robert DeLucia, Senior Economist, Prudential Retirement

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 8 FOURTH QUARTER 2006 MARKET COMMENTARY

Financial Market Returns

Quarter 1 Year 3 Years 5 Years 40.00

35.00 35.05 32.59 30.97 30.00 26.97 26.34 25.85 25.00 23.19

20.00 19.93 18.37 17.64 16.00 15.79 15.46 15.26 15.00 14.98 13.56 12.88 11.85 11.39 10.98 10.44 10.35 10.18 9.46

10.00 8.90 8.49 7.67 6.95 6.82 6.70 6.19 5.06 4.33 4.19

5.00 3.70 1.24 0.00 NAREIT Index MSCI Emerging MSCI EAFE Index Russell 2000 S&P 500 Russell 1000 Russell MidCap LB High Yield LB Aggregate Mar kets

• Performance of the financial markets was mixed during the fourth quarter, with the equity markets registering very strong gains, while the fixed income markets posted relatively modest gains.

• The Russell 2000 beat the S&P 500 for the seventh time in the last eight calendar years. Value beat Growth for the sixth time in the past seven calendar years.

• Foreign equity markets and emerging markets had another strong quarter. Both have trailing 12 month returns above 26% and have outperformed U.S. domestic markets.

Data Source: Russell/Mellon Analytical Services

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 9 FOURTH QUARTER 2006 MARKET COMMENTARY

Domestic Equity Style Returns

Quarter

• Small cap stocks outperformed mid and large cap stocks within each respective style

during the quarter. 8.00 6.95 5.93 • Large 1000) During the fourth quarter and for 2006, value outperformed growth with small cap value (Russell stocks being the market leaders and large cap growth stocks being the market laggards. • All domestic equity asset classes and styles posted double digit gains during 2006 except for large cap growth which returned a respectable 9%. 8.50 7.67 6.95 • Large cap growth continues to suffer from the tech bubble excesses of the late 1990’s as MidCap)

Mid (Russell its performance has significantly trailed all other domestic equity styles at 1, 3 and 5 year time periods.

9.03 8.90 8.77

Small Small 2000) (Russell

Value Blend Growth

1 Year 3 Years 5 Years

22.25 15.46 9.07 15.09 10.98 6.87 10.86 6.82 2.69 Large 1000) Large 1000) Large 1000) (Russell (Russell (Russell

20.22 15.26 10.66 18.77 16.00 12.73 15.88 12.88 8.22 MidCap) MidCap) MidCap) Mid (Russell Mid (Russell Mid (Russell

23.48 18.37 13.35 16.48 13.56 10.51 15.37 11.39 6.93 Small Small Small Small Small 2000) 2000) 2000) (Russell (Russell (Russell

Value Blend Growth Value Blend Growth Value Blend Growth

Data Source: Russell/Mellon Analytical Services

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 10 FOURTH QUARTER 2006 MARKET COMMENTARY

S&P 500 Sector Performance for December 31, 2006

Quarter 1 Year 40.00

40.00 36.80 35.00 35.00 30.77 30.00 30.00 25.00 25.00 20.27

20.00 18.73

20.00 15.79 14.34 14.30

15.00 13.85 13.29 11.44 11.16

15.00 10.28

10.00 9.25 8.69 8.43 7.41 7.05 6.70 6.13 10.00 5.93 5.00 3.53 1.41 5.00 0.00 Telecom Utilities Materials Financials S&P 500 Cons. Disc. Cons. Staples Energy Industrials Technology Health Care 0.00 % S & P 5 0 0 3.51 3.55 3.00 22.23 100.00 10.61 9.24 9.94 10.82 15.10 12.01

• The fourth quarter and 2006 market advance was broad based as all ten S&P 500 sectors posted positive results. • Investor appetite for riskier investments was evident as Health Care and Consumer Staples, two traditional defensive sectors, were the worst performing sectors during the fourth quarter. • Reflecting how fickle the market can be, Materials and Energy were the best performing sectors during the fourth quarter, after being the two worst performing sectors (Materials down 1.5%) and Energy (down 10.4%) during the third quarter. • The three smallest S&P 500 sectors; Materials, Telecom Services, and Utilities were the best performing during 2006.

Data Source: Russell/Mellon Analytical Services

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 11 FOURTH QUARTER 2006 MARKET COMMENTARY

MSCI EAFE Returns for December 31, 2006

Quarter 1 Year 3 Years 5 Years 10 Years 40.00 40.00

36.29

35.00 33.72

35.00 32.02 30.61 30.00

30.00 26.34

25.00 24.51 21.65 21.36

25.00 20.93 19.93

20.00 18.80 16.70

20.00 15.61 15.01 15.00 14.87 14.98 13.51 13.42 12.00 11.46 10.47

15.00 10.28 10.35

10.00 8.77 7.71 6.29 6.24

10.00 5.01 5.00 2.15 5.00 0.00 MSCI EMU Net Dividend Index Europe Pacific Basin ex. Japan United Kingdom MSCI EAFE Index Japan 0.00 % M S CI 11.23 35.00 7.51 23.71 100.00 22.55 EAFE Index

• Developed international markets finished the year strong and easily outperformed U.S. domestic equities. The MSCI EAFE Index finished the quarter with a double digit gain of 10.4% compared to the 6.7% increase registered by the S&P 500 Index. • Market leadership shifted from Europe to the Pacific Basin ex. Japan during the quarter. • Investors willingness to take on additional risk to enhance returns was epitomized in Emerging Markets which led international markets higher with an 18% increase during the quarter and 33% gain for 2006. • 2006 MSCI EAFE returns benefited from the Euro rising 11% versus the U.S.$ and hampered from the Yen losing 1% versus the U.S.$.

Data Source: Russell/Mellon Analytical Services

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 12 FOURTH QUARTER 2006 MARKET COMMENTARY

Fixed Income Index Returns

Quarter 1 Year 3 Years 5 Years 10 Years 14.00

12.00 11.85 10.18 10.00 8.49 8.00 6.59 6.56 6.24 6.16 6.01 6.00 5.90 5.22 5.06 4.85 4.64 4.33 4.26 4.19 4.17 3.81 4.00 3.70 3.48 3.20

2.00 1.60 1.34 1.24 0.84

0.00 LB High Yield LB MBS LB Aggregate LB U.S. Credit LB U.S. Government

• Calendar year 2006 represents the 4th consecutive year in which the total rate of return on the Lehman Index has fallen short of 5%. The last period of four consecutive years during which the annual total return on investment-grade bonds fell below the 5% level was the 1977-1981 period. • Bond yields were positive but were generally below coupon yields due to price erosion. • A weakening economy and a pause by the Fed in raising rates began a bond market rally in the second half of 2006. Although the fourth quarter return for the Lehman Brothers Aggregate Index was a tepid 1.25%, it still was better than the negative returns delivered in the first two quarters.

Data Source: Russell/Mellon Analytical Services

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 13 FOURTH QUARTER 2006 MARKET COMMENTARY

Fixed Income Sector Performance for December 31, 2006

Quarter 1 Year 14.00 14.00

12.00 11.85 12.00 10.00 10.00 8.00 8.00 6.00 5.22 4.70 4.37 4.33

6.00 4.26 4.19 4.00 3.08 4.00

2.00 1.60 1.34 1.24 1.10 1.11 0.72 2.00 0.41 0.00

0.00 -2.00

LB High Yield LB MBS LB ABS LB Agency LB Aggregate LB U.S. Credit LB Treasury-1.30 LB TIPS -2.00 % LB n/a 35.05 6.14 14.72 100.00 19.40 24.68 n/a Aggregate

• Spread products continued to benefit from huge demands from foreign investors, insurance companies, and hedge funds. • High yield bonds continued to be the best performing fixed income sector as corporate profits remained relatively strong reducing investor’s concern about default risk. • Mortgage-backed securities posted a 1.6% return for the quarter primarily because of strong overseas demand. The fourth quarter was the strongest in 2006 for the MBS sector bringing their excess return (spread) over U.S. Treasuries to 214 basis points.

Data Source: Russell/Mellon Analytical Services

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 14 FOURTH QUARTER 2006 MARKET COMMENTARY

U.S. Treasury Yield Curve

5.200

5.000

4.800

4.600

4.400

4.200 12/31/2006 9/30/2006 4.000 12/31/2005

3.800

0.15 0.10 0.05

SPREAD0.00 YIELD 09/30/06 – 12/31/06

6 Mos 1 Yr 3 Yrs 5 Yrs 10 Yrs 30 Years

• The yield curve continues its inversion which has historically foreshadowed an economic slowdown. • At their December 12th meeting, the Federal Open Market Committee kept the Federal Funds rate steady at 5.25%. This represents a pause of four consecutive meetings where rates have not changed. • With the exception of the short maturities, U.S. Treasury yields were below the Federal Funds rate across the maturity spectrum. • During the quarter, the yield curve continued to flatten as the spread between 2 year Treasury Notes and the 30 year Bonds tightened by 8 basis points.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 15 FOURTH QUARTER 2006 MARKET COMMENTARY

Economic & Market Outlook

• We believe the underlying fundamentals of the U.S. economy remain healthy. The current economic expansion is entering year six and should persist for another several years. • 2007 will likely be a year of moderately below-trend economic growth, but the probability of an outright recession is low. Slower U.S. economic growth will in all likelihood trigger an economic slowdown in most foreign economies. • A period of below-trend economic growth would be a healthy development that should be welcomed by both the equity markets and the Federal Reserve. Sub-trend economic growth should alleviate cyclical pressures and strains associated with the economic boom of the previous several years, establishing a healthy and solid foundation for the next phase of the business cycle expansion beginning in 2008. • We feel inflation has peaked for this phase of the economic cycle and should recede further as 2007 unfolds, reinforced by slower economic growth in the world economy and deflationary forces emanating from the accelerating pace of globalization. • We also think interest rates have peaked for this phase of the economic cycle. The Federal Reserve will likely implement a series of interest rate cuts during 2007. • While earnings growth will slow in 2007 from the robust pace of recent years, equities should benefit from an expansion in price- to-earnings multiples.

Source: Robert DeLucia, Senior Economist, Prudential Retirement

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 16 FOURTH QUARTER 2006 ASSET ALLOCATION

Asset Allocation Review

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 17 COUNTY COMMISSIONERS OF CHARLES COUNTY, MARYLAND PENSION PLAN DECEMBER 31, 2006 ASSET ALLOCATION REVIEW Dean M. Molinaro, Vice President, (860) 534-3461 NET DOLLAR WEIGHTED S&P 500 LBIGCB QUARTERLY UPDATE Performance Comparisons Your Plan EAFE RATES OF RETURN NCREIF The U.S. economy continued to expand at a below-trend 80% pace in the fourth quarter. Following sluggish growth in Three Months 4.90% 60% the two previous quarters, U.S. real GDP expanded at an estimated 2.5% annual rate during the final quarter of Plan Year-to-Date 7.58% 40% 2006. The continued severe recession in the housing One Year 11.74% 20% market along with spreading weakness in the automotive Three Years 9.57% 0% and broad manufacturing sectors contributed to the

Five Years 7.02% Rate of Return -20% sluggish growth in the quarter. Ten Years 8.02% -40% 3/02 6/02 9/02 3/03 6/03 9/03 3/04 6/04 9/04 3/05 6/05 9/05 3/06 6/06 9/06

12/02 12/03 12/04 12/05 12/06 The performance of the financial markets was mixed 12-Month Period Ending during the fourth quarter, with the equity markets July 1 Plan Year registering very strong gains, while the fixed-income

December 31, 2006 Status of Assets Long-Term Strategy markets were flat. The total return on the S&P 500 was a very robust 6.7% in the quarter, compared with a 1.25% Short Term total return in the Lehman Brothers Bond Index. Int-Term Fixed 0.01% Int-Term Fixed 9.62% 10% Large Cap Equity Large Cap Equity 26.15% 29% Global equity markets benefited from an abundance of General Acct General Acct global liquidity, continued strong growth in corporate 15.30% 19% earnings, a decline in inflationary expectations, historically low bond yields, expectations of a shift in central bank Int'l Equity policies toward monetary ease, and a record volume of 13.73% Int'l Equity Fixed Income Fixed Income 12% merger and acquisition activity. The S&P 500 index 18.48% 11% registered a total return of 15.8% for all of 2006. Non-U.S Real Estate Mid-Cap Equity Real Estate Mid-Cap Equity Small Cap Equity Small Cap Equity equity markets performed even better, as most foreign 4.52% 5.21% 5% 6% 6.99% 8% markets registered double-digit percentage gains in local Total Assets $73,467,897 currencies, with the notable exception of Japan. Equity 52.08%, Real Estate 4.52%, Fixed Income 43.40% Equity 55%, Real Estate 5%, Fixed Income 40%

Portfolio Growth Versus Net Contributions NEXT STEPS As you can see in the accompanying charts, your Plan' $ $ $ $ $60.675 $73.468 current asset mix is in line with its long-term investment

80.0 strategy. Therefore, no adjustments are needed at this 70.0 time to rebalance your plan. 60.0 Earnings 50.0 40.0 Assets Plus Net Cash Flow 30.0 20.0 10.0 0.0

Dollar Amount (Millions) Dollar 12/01 12/02 12/03 12/04 12/05 12/06

15769 3/12/2007 GLOBAL PORTFOLIO STRATEGIES, INC., A PRUDENTIAL FINANCIAL COMPANY 18 COUNTY COMMISSIONERS OF CHARLES COUNTY, MARYLAND PENSION PLAN DECEMBER 31, 2006 NET PERFORMANCE RESULTS

Dean M. Molinaro, Vice President, (860) 534-3461

Plan Assets as of Last 3 Change Average Annual Last 3 Last 5 Last 10 Account Description FUND NAME 12/31/06 Months YTD Total Return Years Years Years DOMESTIC EQUITY - LARGE CAPITALIZATION Large Cap Blend / Victory Fund Blend $6,441,691 7.42 14.01 14.01 11.11 4.56 7.57 Dryden S&P 500 Index Fund Blend $0 6.62 15.65 15.65 10.26 6.02 8.24 Large Cap Blend / AJO Fund Blend $0 7.28 16.44 16.44 7.72 2.89 5.81 Large Cap Growth / Waddell & Reed Fund Growth $6,025,431 5.09 5.32 5.32 6.19 3.40 N/A Large Cap Growth / Turner Investment Partners Fund Growth $0 5.40 9.00 9.00 10.56 4.01 N/A Large Cap Growth (sub-advised by Wellington Management) Growth $0 4.54 4.18 4.18 4.21 0.33 N/A Large Cap Growth / Jennison Fund Growth $0 4.62 2.63 2.63 8.60 3.05 7.21 Large Cap Value / Barrow Hanley Fund Value $0 7.05 16.92 16.92 14.81 11.44 11.15 Large Cap Value / AJO Fund Value $0 7.72 18.89 18.89 11.71 5.71 N/A Large Cap Value / LSV Asset Management Fund Value $6,741,534 7.64 21.75 21.75 17.31 14.13 13.48 Large Cap Value / (sub-advised by Wellington Mgmt.) Value $0 7.48 16.10 16.10 13.60 9.32 11.15 S&P 500 Index 6.70 15.79 15.79 10.44 6.19 8.42 Russell 1000 Index 6.95 15.46 15.46 10.98 6.82 8.64 Russell 1000 Growth Index 5.93 9.07 9.07 6.87 2.69 5.44 Russell 1000 Value Index 8.00 22.25 22.25 15.09 10.86 11.00 EXTENDED MARKET EQUITY SSgA Russell 3000 Index SL Series Fund (Class A) # Blend $0 7.02 15.46 15.46 10.95 6.85 8.51 Russell 3000 Index 7.12 15.72 15.72 11.19 7.17 8.64 DOMESTIC EQUITY - MID-CAPITALIZATION Mid Cap Blend / New Amsterdam Partners Fund Blend $0 5.17 10.93 10.93 13.50 8.16 N/A Mid Cap Growth / TimesSquare Fund Growth $0 7.68 18.13 18.13 16.80 12.25 N/A Mid Cap Growth / Goldman Sachs Fund Growth $1,753,552 7.16 6.71 6.71 9.49 5.11 N/A Mid Cap Value / Cooke & Bieler Fund Value $2,071,028 9.60 26.34 26.34 15.07 14.27 N/A Mid Cap Value / CRM Fund Value $0 7.92 16.73 16.73 16.54 13.43 N/A Mid Cap Value / Integrity Fund Value $0 7.40 17.30 17.30 16.80 N/A N/A Russell MidCap Index 7.67 15.26 15.26 16.00 12.88 12.14 Russell MidCap Growth Index 6.95 10.66 10.66 12.73 8.22 8.62 Russell MidCap Value Index 8.50 20.22 20.22 18.77 15.88 13.65 DOMESTIC EQUITY - SMALL CAPITALIZATION Small Cap Blend / Wentworth, Hauser and Violich Fund Blend $0 9.21 15.43 15.43 13.77 10.94 12.16 Small Cap Growth / Granahan Fund Growth $0 5.82 8.86 8.86 10.32 6.42 9.45 Small Cap Growth / TimesSquare Fund Growth $2,658,746 6.21 13.53 13.53 12.15 9.38 N/A Small Cap Growth / Essex Fund Growth $0 8.05 9.49 9.49 13.62 14.58 N/A Small Cap Value / MEA Fund Value $2,477,923 8.18 9.59 9.59 10.62 9.45 N/A Small Cap Value / Kennedy Capital Fund Value $0 12.05 18.07 18.07 7.55 7.89 N/A Small Cap Value / Opus Capital Fund Value $0 5.74 8.98 8.98 13.83 16.35 13.41 Small Cap Value / Mellon Equity Fund Value $0 8.43 13.95 13.95 14.29 16.10 14.21 Russell 2000 Index 8.90 18.37 18.37 13.56 11.39 9.44 Russell 2000 Growth Index 8.77 13.35 13.35 10.51 6.93 4.88 Russell 2000 Value Index 9.03 23.48 23.48 16.48 15.37 13.27

19 COUNTY COMMISSIONERS OF CHARLES COUNTY, MARYLAND PENSION PLAN DECEMBER 31, 2006 NET PERFORMANCE RESULTS

Dean M. Molinaro, Vice President, (860) 534-3461

Plan Assets as of Last 3 Change Average Annual Last 3 Last 5 Last 10 Account Description FUND NAME 12/31/06 Months YTD Total Return Years Years Years INTERNATIONAL EQUITY International Blend / The Boston Company Fund Blend $10,088,736 12.02 30.54 30.54 21.11 13.16 N/A SSgA Daily EAFE SL Series Fund (Class T) # Blend $0 10.20 25.92 25.92 19.57 13.81 6.87 International Growth / Artisan Partners Fund Growth $0 10.50 25.40 25.40 19.39 12.13 N/A Dryden International Growth Fund Growth $0 10.28 26.40 26.40 21.11 15.88 7.23 International Growth / Hansberger Global Investors Growth $0 11.21 24.04 24.04 18.10 14.63 10.91 International Value / LSV Asset Management Fund Value $0 11.61 31.63 31.63 24.11 23.04 N/A MSCI EAFE Index 10.35 26.34 26.34 19.93 14.98 7.71 EMERGING MARKETS Dryden Emerging Markets Fund Blend $0 19.80 34.49 34.49 30.79 25.62 9.31 MSCI EMF 17.64 32.59 32.59 30.97 26.97 9.40 REAL ESTATE 09/30/06 09/30/06 09/30/06 09/30/06 09/30/06 09/30/06 CIGNA Realty Investors Open End Real Estate Fund Equity Real Estate $1,882 -0.92 -5.79 -1.78 13.61 9.09 10.71 Prudential Property Investment Separate Account Equity Real Estate $3,318,866 3.31 11.19 17.79 16.21 12.30 13.07 National Council of R. E. Investment Fiduciaries 3.51 11.56 17.62 16.37 12.43 12.51 REAL ESTATE 12/31/06 12/31/06 12/31/06 12/31/06 12/31/06 12/31/06 American Century Real Estate Fund (Investor Shares) # Real Estate $0 9.07 34.69 34.69 26.53 24.47 15.41 NAREIT Equity Index 9.46 35.05 35.05 25.85 23.19 14.48 BALANCED ACCOUNTS Balanced I / (sub-advised by Wellington Mgmt.) Value $0 4.42 15.29 15.29 9.87 7.25 6.52 Balanced Index (40% LB Int. Govt/Credit / 60% S&P500) 4.41 11.01 11.01 7.43 5.77 7.71 FIXED INCOME Guaranteed Deposit Fund* Guaranteed $11,237,787 2006 Old Money Rate: 4.92%; 2007 Old Money Rate: 4.50% N/A Prudential Short-Term Fund Short-Term $7,750 1.13 4.68 4.68 2.91 2.28 3.74 iMoney Net Taxable Money Funds - Net 1.31 4.99 4.99 3.14 2.48 3.89 Core Bond Enhanced Index / PIM Fund Fixed Income Index $0 1.13 3.97 3.97 3.46 5.00 N/A Core Bond / BSAM Fund Government/Corporate $0 1.10 3.96 3.96 3.37 4.94 6.11 High Grade Bond / BSAM Fund Fixed Income $13,575,988 1.15 4.13 4.13 3.54 5.19 N/A Core Plus Bond / BSAM Fund Fixed Income $0 1.31 4.71 4.71 3.71 5.58 N/A Core Plus Bond / PIMCO Fund Fixed Income $0 0.79 3.88 3.88 3.87 5.50 6.72 Core Bond / Blackrock Fund Fixed Income $0 0.97 3.97 3.97 3.37 4.60 6.03 Lehman Brothers Aggregate Bond Index 1.24 4.33 4.33 3.70 5.06 6.24 Corporate Bond / BSAM Fund Corporate $0 1.45 4.35 4.35 3.60 6.04 6.58 Lehman Brothers U.S. Credit Index 1.34 4.26 4.26 3.81 5.90 6.56 Private Placement Fund Private Placement $7,066,981 1.06 4.05 4.05 4.07 5.34 6.25 SSgA Passive Intermediate Bond Index SL Series Fund (Class A) # Fixed Income $0 1.18 4.27 4.27 2.91 4.43 5.61 Lehman Brothers Intermediate Govt / Credit Index 1.03 4.08 4.08 2.90 4.53 5.81 Prudential America Fund Private Placement $0 1.06 3.65 3.65 4.00 5.75 6.40 SSgA Government Credit Bond NL Series Fund (Class A) # Fixed Income $0 1.08 3.74 3.74 3.30 5.03 5.94 Lehman Brothers Govt/Credit Index 1.04 3.78 3.78 3.44 5.17 6.26 High Yield Bond / Caywood-Scholl Fund High Yield $0 3.68 7.82 7.82 6.93 7.99 6.73 Lehman Brothers High Yield Index 4.19 11.85 11.85 8.49 10.18 6.59 TOTAL PLAN ASSETS $73,467,897 *Guaranteed Deposit Fund 2006 New Money Rate, before any contract related charges, is 4.45%. 2007 New Money Rate, beflore any contract related charges, is 4.35%. (1) Denotes Funds on the Due Diligence Advisor Program Watch List for performance related concerns. See footnotes attached for general disclosures and since inception returns for those funds with less than 10 years history. # - Shares of the mutual fund described above are not offered for sale to you. Investments made in this Separate Account are purchasing units of the Separate Account. The Separate Account will then purchase shares of the mutual fund. All voting rights associated with ownership of the mutual fund shares are rights of the Separate Account. The "investment manager" of the PRIAC separate account as defined by ERISA, is Prudential Retirement Insurance and Annuity Company. 20 The performance information provided in this document is for the use of plan sponsors and consultants only. 15769 3/12/2007 Defined Benefit Footnotes

All returns are net of the highest level of management fees charged for the separate account and net of other operational expenses and are before any contract charges, if any, unless noted otherwise. Historical returns reflect actual account performance and the investment manager’s composite, which may consist of one account. Performance is representative of each separate account’s investment management discipline. All returns are deemed accurate at the time of reporting but are subject to change. Performance data represents past performance and is not necessarily indicative of future results. For more information, please contact your Prudential Retirement Investment Advisor. The performance information provided in this document is provided for the use of plan sponsors and consultants only.

(1) This fund is currently on the Due Diligence Advisor Program Watch List for performance related concerns and/or fund manager organizational changes.

Small Company Risk - Smaller companies may present greater opportunities for capital appreciation, but also may involve greater risks than larger companies. As a result, the value of stocks issued by smaller companies may go up and down more than stocks of larger issuers.

International / Foreign Risk - Investing in foreign securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political and economic changes. This may result in greater share price volatility.

Emerging Markets Risk - Investing in emerging markets is generally riskier than investing in foreign securities. Emerging-market countries may have unstable governments and/or economies that are subject to sudden change. These changes may be magnified by the countries’ emergent financial markets, resulting in significant volatility to investments in these countries. These countries also may lack the legal, business, and social framework to support securities markets.

Sector Fund Risk – Sector funds are subject to risks within their specific sectors because they concentrate their investments in securities of companies within those industries. Therefore, the prices of these securities can be volatile.

Money Market - An investment in the money market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Government Bond Fund – Shares of this Fund are not issued or guaranteed by the U.S. government.

High Yield Bond – High Yield “junk” bonds involve a greater risk of default of payment of principal and interest than higher-rated bonds. Also, these bonds tend to be less liquid than higher-rater securities. Therefore, an investment in this Fund may not be appropriate for short-term investing.

The information in this report has been provided by Prudential Retirement Insurance and Annuity Company (“PRIAC”)* and has not been independently verified by Global Portfolio Strategies, Inc. Part II of the Form ADV of Global Portfolio Strategies, Inc. is available without charge upon request.

Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ and its affiliates. Securities products and services are offered by Prudential Investment Management Services LLC (PIMS), Three Gateway Center, 14th Floor, Newark, NJ 07102-4077. PIMS is a Prudential Financial company. Prudential Retirement is a Prudential Financial business.

Separate accounts are insurance products issued by Prudential Retirement Insurance and Annuity Company, Hartford, CT, a Prudential Financial company.

21 Defined Benefit Footnotes (Continued) Inception Footnote Page

FUND NAME DATE INCEPTION Large Cap Growth / Waddell & Reed Fund 06/30/98 6.82 Large Cap Growth / Turner Investment Partners Fund 05/31/98 3.68 Large Cap Growth Fund (sub-advised by Wellington Management) 01/31/01 -4.71 Large Cap Value / AJO Fund 07/31/97 7.83

“Since Inception” Mid Cap Growth / Goldman Sachs Fund 05/31/99 13.67 Average annualized Mid Cap Value (sub-advised by Wellington Management) 01/31/97 15.34 returns Mid Cap Value / Integrity Fund 06/30/02 17.13 for funds with less than 10 years history. Mid Cap Value / Cooke & Bieler Fund 02/28/98 14.86 Small Cap Growth / TimesSquare Fund 11/30/97 12.22 Data is as of: 12/31/06 Small Cap Growth / Essex Fund 10/31/00 15.76 Small Cap Value / MEA - (FKA SCV / Perkins,Wolf,McDonnell) 01/31/97 13.01 MEA Small Cap Value Composite Results 01/31/97 14.12 Small Cap Value / Kennedy Capital Fund 01/31/01 7.42 Kennedy Extended Small Cap Value Composite 12/31/97 15.39 Small Cap Value / Integrity Fund 04/30/99 17.86 Dryden International Equity Composite 12/31/01 17.27 International Blend / The Boston Company Fund 12/31/97 8.25 International Growth / Artisan Partners Fund 01/02/97 7.75 International Value / LSV Asset Management Fund 01/05/97 14.86 Core Bond Enhanced Index / PIM Fund 01/13/97 5.69 High Grade Bond / BSAM Fund 01/15/97 6.44 Core Plus Bond / BSAM Fund 01/16/97 6.45

22 Index Definitions

All indexes are unmanaged. It is impossible to invest in an index.

5-Year Constant Maturity : Returns represent the average yield of Constant Maturit y Lipper Mid-Cap Core Funds Index : Represents the average of the 30 largest qualifying Russell 1000® Growth Index : A market capitalization-weighted index that measures U.S. Treasury Securities over the return period. mutual funds (based on year-end total net assets) in the Lipper Mid-Cap Universe. the performance of those Russell 1000® companies with higher price-to-book ratios and These funds, by portfolio practice, invest at least 75% of their equity assets in companies higher forecasted growth rates. Lehman Brothers Aggregate Bond Index: Composed of securities from the Lehman with market capitalizations (on a three-year weighted basis) less than 300% of the dollarweighted Brothers U.S. Government/Credit Index, Mortgage-Backed Securities Index, and the median market capitalization of the middle 1,000 securities of the S&P Russell 1000® Index : A market-capitalization weighted index that measures the performance Asset-Backed Securities Index. Total return comprises price appreciation/depreciation SuperComposite 1500 Index. Mid-cap core funds have more latitude in the companies in of the 1,000 largest companies in the Russell 3000® Index, which represents and income as a percentage of the original investment. Indexes are rebalanced monthly which they invest. These funds typically have an average price-to-earnings ratio, price-to-book approximately 92% of the total market capitalization of the Russell 3000® Index. by market capitalization. ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. Russell 1000® Value Index : A market capitalization-weighted index that measures the Lehman Brothers High Yield Bond Index : All bonds included in the Lehman Brothers performance of those Russell 1000® companies with lower price-to-book ratios and lower High Yield Bond Index must be dollar-denominated and nonconvertible and have at least Lipper Mid-Cap Growth Funds Index : Represents the average of the 30 largest forecasted growth rates. one year remaining to maturity and an outstanding par value of at least $100 million. This qualifying mutual funds (based on year-end total net assets) in the Lipper Mid-Cap index includes fixed rate, publicly issued, noninvestment-grade debt registered with the Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in Russell 2000® Growth Index : A market capitalization-weighted index that measures SEC (Securities and Exchange Commission). Pay-in-kind (PIK) bonds, Eurobonds, 144A companies with market capitalizations (on a three-year weighted basis) less than 300% the performance of those Russell 2000® companies with higher price-to-book ratios and bonds, and debt from designated emerging market countries, are excluded. Yankees, global of the dollar-weighted median market capitalization of the middle 1,000 securities of the higher forecasted growth rates. bonds (SEC registered) of issuers in G-7 countries, original issue zeros and step-up S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average coupons are included. Generally, securities must be rated Ba1 or lower (including defaulted price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, Russell 2000® Index : A market capitalization-weighted index that measures the performance issuers) by Moody's Investors Service, BB+ or lower by Standard & Poor's, or below compared to the S&P MidCap 400 Index. of the 2,000 smallest companies in the Russell 3000® Index, which represents investment grade by Fitch Investors Service. A small number of unrated bonds is included approximately 8% of the total market capitalization of the Russell 3000® Index. in the index; to be eligible, they must have previously held a high yield rating or have been Lipper Mid-Cap Value Funds Index : Represents the average of the 30 largest associated with a high yield issuer and must trade accordingly. qualifying mutual funds (based on year-end total net assets) in the Lipper Mid-Cap Russell 2000® Value Index : A market capitalization-weighted index that measures the Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in performance of those Russell 2000® companies with lower price-to-book ratios and lower Lehman Brothers Intermediate U.S. Government/Credit Index : Composed of all companies with market capitalizations (on a three-year weighted basis) less than 300% forecasted growth rates. bonds covered by the Lehman Brothers U.S. Government Bond and U.S. Credit Indexes of the dollar-weighted median market capitalization of the middle 1,000 securities of the with maturities between 1 and 9.99 years. This index includes all publicly issued, fixed S&P SuperComposite 1500 Index. Mid-cap value funds typically have a below-average Russell 3000® Index : A market capitalization-weighted index that measures the performance rate, nonconvertible investment-grade corporate debt. Issues are rated at least Baa by price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, of the 3,000 largest U.S. companies based on total market capitalization, which Moody's Investors Service or BBB by Standard & Poor's, if unrated by Moody's. compared to the S&P MidCap 400 Index. represents approximately 98% of the investable U.S. equity market. Collateralized Mortgage Obligations (CMOs) are not included. Total return comprises x : Represents the average of the 30 Russell Midcap® Growth Index : A market capitalization-weighted index that measures priceIndexes appreciation/depreciation are rebalanced monthly and by income market as capitalization. a percentage of the original investment. Lipper larges Sciencet qualifying and mutual Technology funds in Fundsthe Lipper Inde Science and Technology universe (based on the performance of those Russell Midcap companies with higher price-to-book ratios year-end total net assets). These funds, by portfolio practice, invest at least 65% of their and higher forecasted growth rates. The stocks are also members of the Russell 1000® Lipper Balanced Funds Index : Represents the average of the 30 largest qualifying equity assets in science technology stocks. Growth Index. mutual funds (based on year-end total net assets) for the investment objective (to conserve principal by maintaining a balanced portfolio of stocks and bonds). Typically, the Lipper Small-Cap Core Funds Index : Represents the average of the 30 largest Russell Midcap® Index : A market capitalization-weighted index that measures the stock/bond ratio ranges around 60%/40%. qualifying mutual funds (based on year-end total net assets) in the Lipper Small-Cap performance of the 800 smallest companies in the Russell 1000® Index, which represent Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in approximately 24% of the total market capitalization of the Russell 1000® Index. Lipper Global Funds Index : Represents the average of the 30 largest qualifying mutual companies with market capitalizations (on a three-year weighted basis) less than 250% funds (based on year-end total net assets) for the investment objective (to invest at least of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the Russell Midcap® Value Index: A market capitalization-weighted index that measures 25% of its portfolio in securities traded outside of the United States). These funds may S&P SuperComposite 1500 Index. Small-cap core funds have more latitude in the companies the performance of those Russell Midcap companies with lower price-to-book ratios and own U.S. securities as well. in which they invest. These funds typically have an average price-to-earnings ratio, lower forecasted growth rates. The stocks are also members of the Russell 1000® Value price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P Index. Lipper High Yield Bond Funds Index : Represents the average of the 30 largest SmallCap 600 Index. qualifying mutual funds (based on year-end total net assets) for the investment objective S&P 500® Inde x : (registered trademark of The McGraw-Hill Companies, Inc.) An (to seek a high [relative] current yield from fixed income securities without regard to Lipper Small-Cap Growth Funds Index : Represents the average of the 30 largest unmanaged index of 500 common stocks, weighted by market capitalization, representing quality or maturity restrictions). These funds tend to invest in lower-grade debt issues. qualifying mutual funds (based on year-end total net assets) in the Lipper Small-Cap approximately 75% of NYSE (New York Stock Exchange) capitalization and 30% of Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in NYSE issues. (Index performance includes the reinvestment of dividends and capital Lipper International Funds Index : Represents the average of the 30 largest qualifying companies with market capitalizations (on a three-year weighted basis) less than 250% gains.) mutual funds (based on year-end total net assets) for the investment objective (to invest of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the assets in securities whose primary trading markets are outside the United States). S&P SuperComposite 1500 Index. Small-cap growth funds typically have an above-average S&P 500 Citigroup Value Index : Standard & Poor's and Citigroup cooperate to employ a price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value calculation, whereby the market capitalization of the S&P 500 Index is divided Lipper Large-Cap Core Fundsx :Inde Represents the average of the 30 largest qualifying value, compared to the S&P SmallCap 600 Index. equally between growth and value. The value component recognizes undervalued mutual funds (based on year-end total net assets) in the Lipper Large-Cap Universe. companies within the S&P 500 Index, which have lower price-to-book ratios. The These funds, by portfolio practice, invest at least 75% of their equity assets in companies Lipper Small-Cap Value Funds Inde x : Represents the average of the 30 largest index is rebalanced semi-annually. with market capitalizations (on a three-year weighted basis) greater than 300% of the qualifying mutual funds (based on year-end total net assets) in the Lipper Small-Cap dollar-weighted median market capitalization of the middle 1,000 securities of the S&P Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in S&P Mid-Cap 400 Index : Consists of 400 domestic stocks chosen for market size, SuperComposite 1500 Index. Large-cap core funds have more latitude in the companies in companies with market capitalizations (on a three-year weighted basis) less than 250% liquidity, and industry group representation. It is a market-weighted index, with each which they invest. These funds typically have an average price-to-earnings ratio, price-to-book of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the stock affecting the Index in proportion to its market value. ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index. S&P SuperComposite 1500 Index. Small-cap value funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, S&P Small-Cap 600 Index : A capitalization-weighted index of 600 domestic stocks Lipper Large-Cap Growth Funds Index : Represents the average of the 30 largest compared to the S&P SmallCap 600 Index. chosen for market size, liquidity and industry representation. The component stocks are qualifying mutual funds (based on year-end total net assets) in the Lipper Large-Cap weighted according to the total market value of their outstanding shares. The impact of Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in Morgan Stanley Capital International (MSCI) Europe, Australia and Far East a component's price change is proportional to the issues' total market value, which is the companies with market capitalizations (on a three-year weighted basis) greater than (EAFE) Index (net) : A market capitalization-weighted index comprised of companies share price times the number of shares outstanding. These are summed for all 600 300% of the dollar-weighted median market capitalization of the middle 1,000 securities representative of the market structure of 21 developed market countries in Europe, stocks and divided by a predetermined base value. The base value for the S&P SmallCap of the S&P SuperComposite 1500 Index. Large-cap growth funds typically have an above average Australia and the Far East. The MSCI EAFE Index is available both in local currency and 600 Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share U.S. dollar terms. The returns shown in the performance chart are calculated with dividends stock rights, substitutions, etc. growth value, compared to the S&P 500 Index. reinvested and are net of foreign withholding tax. Salomon Smith Barney Three-Month Treasury Bill Index : Performance based on Lipper Large-Cap Value Funds Index : Represents the average of the 30 largest qualifying Morgan Stanley Capital International (MSCI) World Inde x : A market capitalization- short-term securities issued by the U.S. Treasury with a maturity of 91 days, issued at a mutual funds (based on year-end total net assets) in the Lipper Large-Cap Universe. weighted index comprised of companies representative of the market structure of discount from face value. The index is rebalanced monthly, based on market capitalization. These funds, by portfolio practice, invest at least 75% of their equity assets in companies 23 developed market countries in North America (including the U.S.), Europe, and the with market capitalizations (on a three-year weighted basis) greater than 300% of the Asia/Pacific region. The MSCI World Index is available both in local currency and U.S. dollar-weighted median market capitalization of the middle 1,000 securities of the S&P dollar terms. The returns shown in the performance chart are calculated with dividends SuperComposite 1500 Index. Large-cap value funds typically have a below-average price-to- reinvested. earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index.

INST-20060804-A021023 FOURTH QUARTER 2006 PLAN SUMMARY

Plan Summary

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 24 FOURTH QUARTER 2006 PLAN SUMMARY

Large Value Large Cap Value / LSV Asset Management FundS 21.75% 21.75% 17.31% 14.13% 13.48% N/A Jul-02 12.25% 3.38% 0.96% 1 0.77% Russell 1000 Value Index 22.25% 22.25% 15.09% 10.86% 11.00% ------12.29% 0.00% 0.72% ------Lipper Large Cap Value Funds Index 18.30% 18.30% 12.07% 7.67% 8.54% ------12.29% -2.88% 0.48% ------Morningstar Large Value Category Median 18.49% 18.49% 12.56% 8.53% 9.16% ------12.27% -1.94% 0.53% ------

Large Blend Large Cap Blend / Victory FundS 14.01% 14.01% 11.11% 4.56% 7.57% N/A Jan-92 14.03% -2.49% 0.22% 4 0.55% Victory Diversified Large Cap Core Composite 14.01% 14.01% 11.67% 8.04% 11.42% N/A Oct-89 14.56% 0.76% 0.45% 2 0.55% Russell 1000 Index 15.46% 15.46% 10.98% 6.82% 8.64% ------12.33% 0.00% 0.41% ------Lipper Large Cap Core Funds Index 13.37% 13.37% 9.08% 4.99% 7.26% ------11.42% -1.45% 0.28% ------Morningstar Large Blend Category Median 14.60% 14.60% 10.13% 5.98% 8.00% ------12.37% -0.76% 0.34% ------

Large Growth Large Cap Growth / Waddell & Reed FundS 5.32% 5.32% 6.20% 3.40% --- 6.82% Mar-04 12.53% 0.75% 0.14% 3 0.80% Russell 1000 Growth Index 9.07% 9.07% 6.87% 2.69% 5.44% ------13.17% 0.00% 0.09% ------Lipper Large Cap Growth Funds Index 4.71% 4.71% 6.57% 2.01% 4.72% ------13.04% -0.65% 0.04% ------Morningstar Large Growth Category Median 7.24% 7.24% 7.06% 2.94% 6.24% ------13.55% 0.41% 0.11% ------

Mi d Value Mid Cap Value / Cooke & Bieler FundS 26.34% 26.34% 15.07% 14.27% --- 14.86% Jun-04 13.98% -1.87% 0.86% 2 0.80% Russell MidCap Value Index 20.22% 20.22% 18.77% 15.88% 13.65% ------12.40% 0.00% 1.07% ------Lipper Mid Cap Value Funds Index 15.66% 15.66% 14.56% 12.28% 11.01% ------13.25% -3.65% 0.77% ------Morningstar Mid-Cap Value Category Median 16.19% 16.19% 14.67% 11.98% 11.48% ------12.92% -3.44% 0.76% ------

Mi d Gr owth Mid Cap Growth / Goldman Sachs FundS 6.71% 6.71% 9.49% 5.11% --- 13.67% Jun-04 15.64% -2.67% 0.25% 3 0.85% Russell MidCap Growth Index 10.66% 10.66% 12.73% 8.22% 8.62% ------15.76% 0.00% 0.43% ------Lipper Mid Cap Growth Funds Index 11.01% 11.01% 11.54% 6.10% 6.86% ------15.07% -1.68% 0.31% ------Morningstar Mid-Cap Growth Category Median 9.05% 9.05% 11.20% 6.84% 8.92% ------15.28% -0.73% 0.35% ------

Small Value Small Cap Value / MEA FundS 9.59% 9.59% 10.62% 9.45% --- 13.01% Dec-97 15.35% -4.40% 0.52% 4 0.90% Mellon Equity Associates Small Cap Composite 13.77% 13.77% 14.31% 16.15% --- 14.12% Jun-06 15.49% 1.04% 0.90% 3 0.90% Russell 2000 Value Index 23.48% 23.48% 16.48% 15.37% 13.27% ------15.72% 0.00% 0.84% ------Lipper Small Cap Value Funds Index 17.13% 17.13% 14.94% 14.75% 12.66% ------14.57% 0.42% 0.86% ------Morningstar Small Value Category Median 16.78% 16.78% 14.76% 13.90% 12.83% ------14.86% 0.06% 0.81% ------

Small Growth Small Cap Growth / TimesSquare FundS 13.53% 13.53% 12.15% 9.38% --- 12.22% Dec-97 14.38% 3.24% 0.54% 2 0.90% Russell 2000 Growth Index 13.35% 13.35% 10.51% 6.93% 4.88% ------19.36% 0.00% 0.32% ------Lipper Small Cap Growth Funds Index 10.67% 10.67% 8.89% 6.23% 6.93% ------17.72% -0.39% 0.30% ------Morningstar Small Growth Category Median 10.76% 10.76% 9.89% 7.02% 8.77% ------17.88% 0.59% 0.34% ------

Sources: Prudential Retirement, Russell, Morningstar TM. Please refer to the glossary & notes section at the end of this report for all appropriate notes and Open Watch List Closed disclaimers.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 25 FOURTH QUARTER 2006 PLAN SUMMARY

In ternatio nal International Blend / The Boston Company FundS 30.54% 30.54% 21.11% 13.16% --- 8.25% Dec-97 14.36% -2.00% 0.78% 4 1.07% Blend The Boston Company International Core Composite 30.54% 30.54% 24.23% 20.71% 11.85% N/A Dec-96 12.40% 6.14% 1.40% 1 1.07% MSCI EAFE (net) 26.34% 26.34% 19.93% 14.98% 7.71% ------13.51% 0.00% 0.94% ------Lipper International Funds Index 25.89% 25.89% 19.98% 15.14% 8.77% ------13.49% 0.24% 0.95% ------Morningstar Foreign Large Blend Category Median 25.32% 25.32% 19.08% 13.68% 7.53% ------13.69% -1.05% 0.85% ------

Special Equity CIGNA Realty Investors Open End Real Estate Fund -6.70% -6.70% 12.94% 9.22% 10.38% N/A Oct-81 --- 0.00% 0.00% --- 1.10% - Real Estate NAREIT Index 35.05% 35.05% 25.85% 23.19% 14.48% ------14.28% 0.00% 1.38% ------Morningstar Specialty-Real Estate Category Median 35.19% 35.19% 26.62% 23.78% 15.17% ------13.87% 0.90% 1.43% ------

In termed iate- High Grade Bond / BSAM FundS 4.13% 4.13% 3.54% 5.19% --- 6.44% Nov-99 3.67% 0.25% 0.76% 1 0.42% term Bond Lehman Brothers Aggregate Bond Index 4.33% 4.33% 3.70% 5.06% 6.24% ------3.82% 0.00% 0.70% ------Prudential Private Placement Fund 4.05% 4.05% 4.07% 5.34% 6.25% N/A Dec-77 3.20% 0.96% 0.90% 1 0.41% Lehman Brothers Gov/Credit Intermediate 4.08% 4.08% 2.90% 4.53% 5.81% ------3.43% 0.00% 0.63% ------Morningstar Intermediate-term Bond Category Median 4.12% 4.12% 3.47% 4.76% 5.78% ------3.74% 0.13% 0.63% ------

Ultra-Short Prudential Short-Term Bond FundS 4.68% 4.68% 2.91% 2.28% 3.74% N/A Jun-76 0.41% -0.07% -1.00% --- 0.42% Bond Lehman Brothers 1 - 3 Year Government Index 4.12% 4.12% 2.30% 2.97% 4.79% ------1.53% 0.00% 0.41% ------Morningstar Ultra Short Bond Category Median 4.74% 4.74% 2.91% 2.61% 4.22% ------0.72% 0.08% 0.42% ------

Stable Value Guaranteed Deposit Fund 2006 Old Money Rate: 4.92%, New Money Rate: 4.45% - 2007 Old Money Rate: 4.50%; New Money Rate: 4.35% 5 Year Treasury Average Yield 4.71% 4.71% 4.05% 3.76% 4.64% ------0.20% 0.00% 5.14% ------

Sources: Prudential Retirement, Russell, Morningstar TM. Please refer to the glossary & notes section at the end of this report for all appropriate notes and Open Watch List Closed disclaimers.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 26 FOURTH QUARTER 2006 PLAN SUMMARY

Plan Summary Footnotes

The performance quoted represents past performance. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. For performance information current to the most recent month end, please contact your Prudential representative.

Smaller companies may present greater opportunities for capital appreciation, but also may involve greater risks than larger companies. As a result, the value of stocks issued by smaller companies may go up and down more than stocks of larger issuers.

Investing in foreign securities presents certain unique risks not associated with domestic investments, such as currency fluctuation and political and economic changes. This may result in greater share price volatility.

Sector funds are subject to risks within their specific sectors because they concentrate their investments in securities of companies within those industries. Therefore, the prices of these securities can be volatile.

Prudential Retirement’s Manager of Managers funds are offered through separate accounts available under group annuity contracts issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, a Prudential Financial company.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 27 FOURTH QUARTER 2006 PLAN SUMMARY

Plan Summary

RISK/RETURN ANALYSIS: Trailing 5 years ended 12/31/2006 STYLE ANALYSIS (01/01/2004 - 12/31/2006)

36-Month Moving Window, Computed Monthly 16 Russell Top 200 Value Russell Top 200 Growth 14 LARGE 12

10 R usse ll

8 MidC ap ap 6 MID G RETURN row th

4 Russell MidCapValue

0 20 0 0 5 10 15 20 0 2 4 6 81012141618 SMALL Russell 2000 Value Russell 2000 Growth STANDARD DEVIATION VALUE BLEND GROWTH

High Grade Bond / BSAM Fund International Blend / The Boston Company Fund

Large Cap Blend / Victory Fund Large Cap Grow th / Waddell & Reed Fund Large Cap Value / LSV Asset Management Fund Mid Cap Grow th / Goldman Sachs Fund

Mid Cap Value / Cooke & Bieler Fund Prudential Private Placement Fund

Prudential Short-Term Bond Fund Small Cap Grow th / TimesSquare Fund Small Cap Value / MEA Fund S&P 500 Index

MSCI EA FE Index Lehman Brothers Aggregate Bond Index Citigroup Three Month T-Bill

Sources: Prudential Retirement, Russell. Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 28 FOURTH QUARTER 2006 FUNDS FOR CONSIDERATION

Your plan offers a broad array of investment options with varying degrees of risk and reward potential. In addition, your plan is well diversified, with offerings covering most of the major investment categories and styles. Furthermore, your plan offers a solid "core" investment line-up, with no overlap or redundancy in any asset categories.

Large Growth Large Cap Growth / Turner Investment Partners 9.00% 9.00% 10.56% 4.01% --- 3.68% May-98 13.65% 1.36% 0.19% 1 0.75% Turner Investment Partners Core Gro Equity Comp 9.00% 9.00% 11.11% 6.21% 8.68% N/A Mar-90 14.26% 3.49% 0.33% 1 0.75% Russell 1000 Growth Index 9.07% 9.07% 6.87% 2.69% 5.44% ------13.17% 0.00% 0.09% ------Lipper Large Cap Growth Funds Index 4.71% 4.71% 6.57% 2.01% 4.72% ------13.04% -0.65% 0.04% ------Morningstar Large Growth Category Median 7.24% 7.24% 7.06% 2.94% 6.24% ------13.55% 0.41% 0.11% ------

Small Value Small Cap Value/Kennedy Capital Fund 18.07% 18.07% 7.55% 7.89% --- 7.53% Jan-01 23.70% -9.79% 0.33% 4 0.90% Kennedy Extended Small Cap Value Composite 18.07% 18.07% 16.88% 17.68% --- 15.51% Dec-97 16.77% 1.83% 0.91% 3 0.90% Russell 2000 Value Index 23.48% 23.48% 16.48% 15.37% 13.27% ------15.72% 0.00% 0.84% ------Lipper Small Cap Value Funds Index 17.13% 17.13% 14.94% 14.75% 12.66% ------14.57% 0.42% 0.86% ------Morningstar Small Value Category Median 16.78% 16.78% 14.76% 13.90% 12.83% ------14.86% 0.06% 0.81% ------

Sources: Prudential Retirement, Russell, Morningstar TM. Please refer to the glossary & notes section at the end of this report for all appropriate notes and Open Watch List Closed disclaimers.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 29 FOURTH QUARTER 2006 FUNDS FOR CONSIDERATION

Funds For Consideration Footnotes

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 30 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Investment Options Review

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 31 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Large Value

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Large Cap Value / LSV Asset Management FundS 21.75% 21.75% 17.31% 14.13% 13.48% N/A Jul-02 12.25% 3.38% 0.96% 10.77% Russell 1000 Value Index 22.25% 22.25% 15.09% 10.86% 11.00% ------12.29% 0.00% 0.72% ------ Lipper Large Cap Value Funds Index 18.30% 18.30% 12.07% 7.67% 8.54% ------12.29% -2.88% 0.48% ------Morningstar Large Value Category Median 18.49% 18.49% 12.56% 8.53% 9.16% ------12.27% -1.94% 0.53% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Large Cap Value / LSV Asset Management FundS 11% 11% 2% 1% 3% 52% 4% 3%

Return rank within category is the percentile ranking of an investment option's returns relative to the other investment options in its category. The highest ranking a fund can receive is 1. The lowest is 100.

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

16 28 14

24 12

20 10

8 16 RETURN RETURN 6

12 4

8 2

0 4 0 5 10 15 20 25 30

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Large Value Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 32 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Large Blend

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Large Cap Blend / Victory FundS 14.01% 14.01% 11.11% 4.56% 7.57% N/A Jan-92 14.03% -2.49% 0.22% 40.55% z Victory Diversified Large Cap Core Composite 14.01% 14.01% 11.67% 8.04% 11.42% N/A Oct-89 14.56% 0.76% 0.45% 2 0.55% Russell 1000 Index 15.46% 15.46% 10.98% 6.82% 8.64% ------12.33% 0.00% 0.41% ------ Lipper Large Cap Core Funds Index 13.37% 13.37% 9.08% 4.99% 7.26% ------11.42% -1.45% 0.28% ------Morningstar Large Blend Category Median 14.60% 14.60% 10.13% 5.98% 8.00% ------12.37% -0.76% 0.34% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Large Cap Blend / Victory FundS 60% 60% 28% 83% 63% 13% 89% 84% z Victory Diversified Large Cap Core Composite 60% 60% 22% 17% 7% 9% 25% 27%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

20 22 18 20 16 18 14 16 12

14 10 12 8 RETURN RETURN 10 6 4 8 2 6 0 4 -2 2 0 5 10 15 20 25 30

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Large Blend Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 33 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Large Growth

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Large Cap Growth / Turner Investment Partners 9.00% 9.00% 10.56% 4.01% --- 3.68% May-98 13.65% 1.36% 0.19% 1 0.75% z Turner Investment Partners Core Gro Equity Comp 9.00% 9.00% 11.11% 6.21% 8.68% N/A Mar-90 14.26% 3.49% 0.33% 1 0.75% z Large Cap Growth / Waddell & Reed FundS 5.32% 5.32% 6.20% 3.40% --- 6.82% Mar-04 12.53% 0.75% 0.14% 30.80% Russell 1000 Growth Index 9.07% 9.07% 6.87% 2.69% 5.44% ------13.17% 0.00% 0.09% ------ Lipper Large Cap Growth Funds Index 4.71% 4.71% 6.57% 2.01% 4.72% ------13.04% -0.65% 0.04% ------Morningstar Large Growth Category Median 7.24% 7.24% 7.06% 2.94% 6.24% ------13.55% 0.41% 0.11% ------Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Large Cap Growth / Turner Investment Partners 35% 35% 12% 34% --- 49% 35% 35% z Turner Investment Partners Core Gro Equity Comp 35% 35% 10% 13% 15% 35% 14% 15% z Large Cap Growth / Waddell & Reed FundS 71% 71% 66% 45% --- 73% 46% 45%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

20 16

15 12 10

8 5 RETURN RETURN 4 0

-5 0

-10 -4 0 1020304050

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Large Growth Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 34 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Mid Value

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Mid Cap Value / Cooke & Bieler FundS 26.34% 26.34% 15.07% 14.27% --- 14.86% Jun-04 13.98% -1.87% 0.86% 20.80% Russell MidCap Value Index 20.22% 20.22% 18.77% 15.88% 13.65% ------12.40% 0.00% 1.07% ------ Lipper Mid Cap Value Funds Index 15.66% 15.66% 14.56% 12.28% 11.01% ------13.25% -3.65% 0.77% ------Morningstar Mid-Cap Value Category Median 16.19% 16.19% 14.67% 11.98% 11.48% ------12.92% -3.44% 0.76% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Mid Cap Value / Cooke & Bieler FundS 1% 1% 44% 16% --- 36% 30% 29%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

20 32 18

28 16 14 24 12

20 10

RETURN 8 16 RETURN 6

12 4

8 2 0 4 0 5 10 15 20 25

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Mid-Cap Value Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 35 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Mid Growth

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Mid Cap Growth / Goldman Sachs FundS 6.71% 6.71% 9.49% 5.11% --- 13.67% Jun-04 15.64% -2.67% 0.25% 30.85% Russell MidCap Growth Index 10.66% 10.66% 12.73% 8.22% 8.62% ------15.76% 0.00% 0.43% ------ Lipper Mid Cap Growth Funds Index 11.01% 11.01% 11.54% 6.10% 6.86% ------15.07% -1.68% 0.31% ------Morningstar Mid-Cap Growth Category Median 9.05% 9.05% 11.20% 6.84% 8.92% ------15.28% -0.73% 0.35% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Mid Cap Growth / Goldman Sachs FundS 71% 71% 68% 75% --- 44% 75% 74%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

25 20

20 16 15

12 10 RETURN RETURN 8 5

0 4

-5 0 0 5 10 15 20 25 30

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Mid-Cap Growth Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 36 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Small Value

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Small Cap Value / MEA FundS 9.59% 9.59% 10.62% 9.45% --- 13.01% Dec-97 15.35% -4.40% 0.52% 40.90% z Mellon Equity Associates Small Cap Composite 13.77% 13.77% 14.31% 16.15% --- 14.12% Jun-06 15.49% 1.04% 0.90% 3 0.90% Russell 2000 Value Index 23.48% 23.48% 16.48% 15.37% 13.27% ------15.72% 0.00% 0.84% ------ Lipper Small Cap Value Funds Index 17.13% 17.13% 14.94% 14.75% 12.66% ------14.57% 0.42% 0.86% ------Morningstar Small Value Category Median 16.78% 16.78% 14.76% 13.90% 12.83% ------14.86% 0.06% 0.81% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Small Cap Value / MEA FundS 93% 93% 91% 96% --- 40% 95% 95% z Mellon Equity Associates Small Cap Composite 69% 69% 57% 26% 23% 35% 38% 35%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

30 28

26 25 24 22 20 20 18 15 RETURN 16 RETURN 10 14 12 5 10 8 0 6 0 5 10 15 20 25

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Smaller companies may present greater opportunities for capital appreciation, but also may involve greater risks than larger companies. As a result, the value of stocks issued by sm aller companies may go up and down more than stocks of larger issuers.

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Small Value Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 37 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Small Value

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Small Cap Value/Kennedy Capital Fund 18.07% 18.07% 7.55% 7.89% --- 7.53% Jan-01 23.70% -9.79% 0.33% 4 0.90% z Kennedy Extended Small Cap Value Composite 18.07% 18.07% 16.88% 17.68% --- 15.51% Dec-97 16.77% 1.83% 0.91% 3 0.90% Russell 2000 Value Index 23.48% 23.48% 16.48% 15.37% 13.27% ------15.72% 0.00% 0.84% ------ Lipper Small Cap Value Funds Index 17.13% 17.13% 14.94% 14.75% 12.66% ------14.57% 0.42% 0.86% ------Morningstar Small Value Category Median 16.78% 16.78% 14.76% 13.90% 12.83% ------14.86% 0.06% 0.81% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Sm all Cap Value/Kennedy Capital Fund 46% 46% 98% 98% --- 2% 99% 98% z Kennedy Extended Small Cap Value Composite 46% 46% 15% 13% --- 19% 27% 32%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

30 28

25 24

20 20

15 16 RETURN RETURN 10 12

5 8

0 4 0 5 10 15 20 25

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Smaller companies may present greater opportunities for capital appreciation, but also may involve greater risks than larger companies. As a result, the value of stocks issued by sm aller companies may go up and down more than stocks of larger issuers.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 38 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Small Growth

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Small Cap Growth / TimesSquare FundS 13.53% 13.53% 12.15% 9.38% --- 12.22% Dec-97 14.38% 3.24% 0.54% 20.90% Russell 2000 Growth Index 13.35% 13.35% 10.51% 6.93% 4.88% ------19.36% 0.00% 0.32% ------ Lipper Small Cap Growth Funds Index 10.67% 10.67% 8.89% 6.23% 6.93% ------17.72% -0.39% 0.30% ------Morningstar Small Growth Category Median 10.76% 10.76% 9.89% 7.02% 8.77% ------17.88% 0.59% 0.34% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Small Cap Growth / TimesSquare FundS 31% 31% 30% 32% --- 92% 28% 21%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

30 24 20

20 10 0 16 -10

12 -20

RETURN -30 8 RETURN -40

4 -50

0 -60 -70 -4 0 1020304050

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Smaller companies may present greater opportunities for capital appreciation, but also may involve greater risks than larger companies. As a result, the value of stocks issued by sm aller companies may go up and down more than stocks of larger issuers.

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Small Growth Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 39 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

International Blend

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z International Blend / The Boston Company FundS 30.54% 30.54% 21.11% 13.16% --- 8.25% Dec-97 14.36% -2.00% 0.78% 41.07% z The Boston Company International Core Composite 30.54% 30.54% 24.23% 20.71% 11.85% N/A Dec-96 12.40% 6.14% 1.40% 1 1.07% MSCI EAFE (net) 26.34% 26.34% 19.93% 14.98% 7.71% ------13.51% 0.00% 0.94% ------ Lipper International Funds Index 25.89% 25.89% 19.98% 15.14% 8.77% ------13.49% 0.24% 0.95% ------Morningstar Foreign Large Blend Category Median 25.32% 25.32% 19.08% 13.68% 7.53% ------13.69% -1.05% 0.85% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z International Blend / The Boston Company FundS 5% 5% 16% 59% --- 25% 71% 68% z The Boston Company International Core Composite 5% 5% 3% 2% 6% 95% 2% 1%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

25 35

30 20

25 15 20

RETURN 10 15 RETURN

10 5

5 0 0 0 5 10 15 20 25

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Foreign Large Blend Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 40 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Special Equity - Real Estate

z CIGNA Realty Investors Open End Real Estate Fund -6.70% -6.70% 12.94% 9.22% 10.38% N/A Oct-81 ------1.10% z Prudential Property Investment Separate Account* 15.22% 15.22% 17.20% 12.95% 13.16% N/A ------ National Council of R.E. Investment Fiduciaries 16.59% 16.59% 17.03% 13.28% 12.72% ------

Morningstar Specialty-Real Estate Category Median 35.19% 35.19% 26.62% 23.78% 15.17% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z CIGNA Realty Investors Open End Real Estate Fund 67% 67% 67% 67% 67% ------z Prudential Property Investment Separate Account* 34% 34% 34% 34% 34% ------

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

40 50 35

40 30

30 25

20 20 RETURN RETURN 15

10 10

0 5

0 -10 0 5 10 15 20 25

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Specialty-Real Estate Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 41 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Intermediate-Term Bond

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z High Grade Bond / BSAM FundS 4.13% 4.13% 3.54% 5.19% --- 6.44% Nov-99 3.67% 0.25% 0.76% 10.42% Lehman Brothers Aggregate Bond Index 4.33% 4.33% 3.70% 5.06% 6.24% ------3.82% 0.00% 0.70% ------z Prudential Private Placement Fund 4.05% 4.05% 4.07% 5.34% 6.25% N/A Dec-77 3.20% 0.96% 0.90% 1 0.41% Lehman Brothers Gov/Credit Intermediate 4.08% 4.08% 2.90% 4.53% 5.81% ------3.43% 0.00% 0.63% ------Morningstar Intermediate-term Bond Category Median 4.12% 4.12% 3.47% 4.76% 5.78% ------3.74% 0.13% 0.63% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z High Grade Bond / BSAM FundS 49% 49% 46% 25% --- 60% 27% 21% z Prudential Private Placement Fund 55% 55% 18% 22% 20% 91% 18% 10%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

12 9

8 10

7 8

6 6 5 RETURN RETURN 4 4

3 2

2 0 1 0 5 10 15 20

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Interm ediate-term Bond Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 42 FOURTH QUARTER 2006 INVESTMENT OPTIONS REVIEW

Ultra-Short Bond

YTD Average Annual Total Returns as of 12/31/2006 Inception Risk Alpha Sharpe DDA Rank Expense Investment Option/Benchmark Return 1 Year 3 Years 5 Years 10 Years Inception Date 5 Years 5 Years 5 Years 9/30/06 Ratio z Prudential Short-Term Bond FundS 4.68% 4.68% 2.91% 2.28% 3.74% N/A Jun-76 0.41% -0.07% -1.00% --- 0.42% Lehman Brothers 1 - 3 Year Government Index 4.12% 4.12% 2.30% 2.97% 4.79% ------1.53% 0.00% 0.41% ------Morningstar Ultra Short Bond Category Median 4.74% 4.74% 2.91% 2.61% 4.22% ------0.72% 0.08% 0.42% ------

Return Rank w ithin Category YTD 1 Year 3 Years 5 Years 10 Years Risk Alpha Sharpe z Prudential Short-Term Bond FundS 53% 53% 50% 87% 86% 98% 73% 95%

CATEGORY RETURN: Trailing Period Returns as of 12/31/2006 RISK RETURN ANALYSIS: Trailing 5 Years Ended 12/31/2006

3.5 7 3 6 2.5

5 2

4 1.5 RETURN RETURN

3 1

0.5 2

0 1 00.511.52

1 Year 3 Year 5 Year 10 Year STANDARD DEVIATION

Please refer to the glossary & notes section at the end of this report for all appropriate notes and disclaimers. Open Watch List Closed Source: Morningstar TM Ultra Short Bond Category for creating asset class universe.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 43 FOURTH QUARTER 2006 GLOSSARY & NOTES

Glossary & Notes

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 44 FOURTH QUARTER 2006 INDEX DEFINITIONS

Index Definitions

A market index is an unmanaged portfolio of securities such as stocks and bonds. An index is often used as a comparative benchmark for managed portfolios such as mutual funds. These indices are presented to help you evaluate the performance of the broad market which they represent, and provide you with an understanding of that market’s historic long-term performance. They are an unmanaged weighted index providing a broad indicator of price movement. Individual investors cannot invest directly in an index/average. Past performance is not indicative of future results.

Fixed Income Indices

• Citigroup 3 Month T-Bill Index is an index whereby equal dollar amounts of three-month Treasury bills are purchased at the beginning of each of three consecutive months. As each bill matures, all proceeds are rolled over or reinvested in a new three-month bill. The income used to calculate the monthly return is derived by subtracting the original amount invested from the maturity value • Lehman Brothers Aggregate Index covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage passthrough securities, asset- backed securities, and commercial mortgage-based securities • Lehman Brothers U.S. Government Bond Index is comprised of both the Treasury and Agency indices. • Lehman Brothers U.S. Treasury Index accounts for nearly 65% of the Government Index and includes public obligations of the U.S. Treasury that have remaining maturities of more than one year. • Lehman Brothers Agency Index accounts for roughly 35% of the Government Index and includes publicly issued debt of U.S. government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. government. • Lehman Brothers 1-3 Year Government Bond Index includes the Treasury Bond and the Agency Bond indices that have maturities of one to three years. • Lehman Brothers 1-3 Year Government/Credit Index includes the Lehman Brothers Government and Lehman Brothers Corporate Bond indices that have maturities of one to three years. • Lehman Brothers U.S. Credit Bond Index is comprised of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. • Lehman Brothers Intermediate U.S. Government/Credit Index is composed of all bonds covered by the Lehman Brothers U.S. Government Bond and U.S. Credit Indices with maturities between 1 and 9.99 years. The index includes all publicly issued, fixed rate, nonconvertible investment-grade corporate debt. Issues are rated at least Baa by Moody’s Investors Service or BBB by S&P, 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. • Lehman Brothers Intermediate Government/Credit Index includes the Lehman Brothers Government and Lehman Brothers Corporate Bond indices that have maturities of up to ten years. • Lehman Brothers Long Term Government/Credit Index includes the Government and Corporate indices that have maturities of 10 years or longer. • Lehman Brothers U.S. Corporate Investment Grade Index includes investment grade bonds issued by corporations and is subdivided into Industrial, Finance, and Utility sectors. • Lehman Brothers Mortgage Backed Securities Index covers the mortgage-backed passthrough securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). • Lehman Brothers High Yield Index is a weighted index comprised of all fixed income securities having a maximum quality rating of Ba1 (including defaulted issues), a minimum outstanding amount of $150 million and at least one year to maturity • Lehman Brothers Global index provides a broad based measure of the international investment grade bond market. The index combines the U.S. Aggregate Index with dollar-denominated versions of the Pan-European Index and the Japanese, Canadian, Australian and New Zealand components of the Global Treasury Index • Lehman Brothers Global Ex US Bond Index is a broad, unmanaged indicator of foreign bond market performance consisting of fixed rate, nonconvertible debt that has at least one year remaining to maturity. Securities from countries classified as emerging markets are excluded. • Lehman Brothers Intermediate Government Index includes those indices found in the Lehman Brothers Government Index that have a maturity of one to three years. • Lehman Brothers Municipal Bond Index serves as a benchmark for long-term, investment-grade, tax-exempt municipal bonds. The returns we publish for the index are total returns, which include reinvestment of dividends. • Lehman Brothers Long Term Government Index includes those indexes found in the LB Government index, which have a maturity of 10 years or more. The returns we publish for the index are total returns, which include reinvestment of dividends.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 45 FOURTH QUARTER 2006 INDEX DEFINITIONS

Index Definitions

Morgan Stanley Capital International (MSCI) Indices

• MSCI EAFE Index is a weighted, unmanaged index of the performance of 1,100 securities in major overseas stock markets of Europe, Australasia, and the Far East. • MSCI EAFE Growth Index includes those firms in the MSCI EAFE Index with higher Price/Book Value (P/BV) ratios relative to their respective MSCI country index • MSCI EAFE Value Index includes those firms in the MSCI EAFE Index with lower Price/Book Value (P/BV) ratios relative to their respective MSCI country index. • MSCI EAFE Small Cap Index includes 40% of the eligible small cap universe within each industry group, within each country. • MSCI World Index is a weighted, unmanaged index of the performance of approximately 1,500 securities listed on the stock exchanges of the U.S., Europe, Australia, and the Far East. • MSCI World Growth Index includes those firms in the MSCI World Index with higher Price/Book (P/BV) ratios relative to their respective MSCI country index • MSCI World Value Index includes those firms in the MSCI World Index with lower Price/Book (P/BV) ratios relative to their respective MSCI country index. • MSCI Europe Index is a free-float-adjusted market-capitalization index that is designed to measure developed market equity performance in Europe • MSCI Japan Index measures the performance of Japan’s stock market • MSCI Pacific ex. Japan index measures the performance of stock markets in Australia, Hong Kong, New Zealand, and Singapore, and Malaysia. • MSCI Emerging Markets Free Index is a weighted, unmanaged index of the performance of approximately 965 companies representing Asia, Africa, Europe and North and South America. MSCI Free Indexes account for the actual buyable securities available to foreign investors by taking into account the local market restrictions on share ownership by foreigners. These indices are calculated in U.S. dollars, without dividends reinvested. • The MSCI EMU (European Economic and Monetary Union) IndexSM is a free float-adjusted market capitalization index that is designed to measure equity market performance within EMU. As of June 2006 the MSCI EMU Index consisted of the following 11 developed market country indices: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.

Russell Style Indices

The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 90% of the investable U.S. equity market. Subsets of this index include the Russell 2000® Index, which measures the performance of the 2,000 smallest companies in the Russell 3000, the Russell 1000® Index, which measures the performance of the 1,000 largest companies in the Russell 3000, and the Russell Midcap Index, which measures the performance of the 800 smallest companies in the Russell 1000. The Russell 2000 Value Index, Russell 1000 Value Index and Russell Midcap Value Index measure the performance of those companies in the respective broad index with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Growth Index, Russell 1000 Growth Index and Russell Midcap Growth Index measure the performance of those companies in the respective broad index with higher price-to-book ratios and higher forecasted growth values.

Standard & Poor’s Indices

The Standard & Poor’s 500® is an unmanaged capitalization-weighted index of 500 stocks generally representative of large companies (as measured by market capitalization). The Standard & Poor’s Midcap 400® and Smallcap 600® are unmanaged indices generally representative of mid-sized and small companies respectively. Standard & Poor’s neither sponsors nor endorses the Prudential Stock Index Fund. Investors cannot invest directly in indices or market averages.

• S&P Health Care Index encompasses two main industry groups. The first includes companies who manufacture health care equipment and supplies or provide health care related services, including distributors of health care products, providers of basic health-care services, and owners and operators of health care facilities and organizations. The second regroups companies primarily involved in the research, development, production and marketing of pharmaceuticals and biotechnology products. • S&P Consumer Staples Index includes companies that tend to be less sensitive to economic cycles. It includes manufacturing and distributors of food, beverages and tobacco and producers of non-durable household goods and personal products. It also includes food and drug retailing companies.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 46 FOURTH QUARTER 2006 INDEX DEFINITIONS

Index Definitions

Standard & Poor’s Indices cont.

• S&P Industrials Index includes companies whose businesses manufacture and distribute capital goods, including aerospace and defense, construction, engineering and building products, electrical and industrial machinery. It also includes companies who provide commercial services and supplies, including printing, employment, environmental, office services and transportation services including airlines, couriers, marine, road, and rail and transportation infrastructure. • S&P Financials Index contains companies involved in activities such as banking, consumer finance, investment banking and brokerage, asset management, insurance and investment, and real estate, including REITs. • S&P Consumer Discretionary Index includes companies that tend to be most sensitive to economic cycles. Its manufacturing segment includes automotive, household durable goods, textile and apparel, and leisure equipment. The services segment includes hotels, restaurants and other leisure facilities, media production and services and consumer retailing. • S&P Energy Index encompasses two main industry groups. The first includes companies who manufacture oil rigs, drilling equipment and other energy-related services and equipment, including seismic data collection. The second group includes the exploration, production, marketing, refining and/or transportation of oil and gas products • S&P Utilities Index encompasses those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power. This sector includes both nuclear and non-nuclear facilities • S&P Materials Index includes companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, metals, minerals and mining companies, including producers of steel. • S&P Technology Index encompasses companies in two main industry groups. The first group includes technology software & services, including companies that primarily develop software in various fields such as the Internet, applications, systems and/or database managements and companies that proved information technology consulting and services. The second group includes technology hardware & equipment, including manufacturing and distributors of communications equipment, computers and peripherals, electronic equipment and related instruments, and semiconductor equipment and products • S&P Telecommunication Services Index contains companies that provide communications services primarily through a fixed-line, cellular, wireless, high bandwidth and/or fiber optic cable network.

Lipper Indices

• Lipper Large Cap Value Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Large Cap Universe • Lipper Large Cap Core Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Large Cap Universe. • Lipper Large Cap Growth Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Large Cap Universe. • Lipper Mid Cap Value Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Mid Cap Universe. • Lipper Mid Cap Core Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Mid Cap Universe • Lipper Mid Cap Growth Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Mid Cap Universe. • Lipper Small Cap Value Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Small Cap Universe. • Lipper Small Cap Core Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Small Cap Universe. • Lipper Small Cap Growth Funds Index is an equal dollar weighted average of the 30 largest qualifying mutual funds (based on year-end total assets) in the Lipper Small Cap Universe. • Lipper Global Funds Index is an equal dollar weighted index of the 30 largest qualifying mutual funds (based on year-end total assets) for the investment objective (to invest at least 25% of its portfolio in securities traded outside of the United States.) These funds may own U.S. securities as well. • Lipper International Funds Index is an equal dollar weighted index of the 30 largest qualifying mutual funds (based on year-end total assets) for the investment objective (to invest assets in securities whose primary trading markets are outside the United States.) • Lipper Real Estate Funds Index is an equal dollar weighted index of the 30 largest qualifying mutual funds in the Lipper Real Estate universe (base on year-end total net assets.) • Lipper Science & Technology Funds Index is an equal dollar weighted index of the 30 largest qualifying mutual funds in the Lipper Science & Technology universe (base on year-end total net assets.) These funds, by portfolio practice invest at least 65% of their equity assets in science technology stocks.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 47 FOURTH QUARTER 2006 INDEX DEFINITIONS

Index Definitions

Other Indices:

• Lipper Balanced Funds Index is an equal dollar weighted index of the 30 largest qualifying mutual funds (based on year-end total assets) for the investment objective (to conserve principal by maintaining a balanced portfolio of stocks and bonds.) Typically the stock/n=bond ratio ranges around 60%/40%. • NASDAQ Composite Index measures the performance of all issues listed on the NASDAQ Stock Market, except for rights, warrants, units, and convertible debentures. • Dow Jones Industrial Average (DJIA) is a price weighted average of 30 blue-chip stocks that are generally leaders in their industry and are listed on the New York Stock Exchange. • 60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index is an unmanaged, weighted average composite composed of 60% S&P 500 Index (measuring U.S. equities) and 40% Lehman Brothers Aggregate Bond Index (measuring U.S. bonds with maturities of at least one year). • 60% S&P 500 Index/40% Lehman Brothers Intermediate Gov’t/ Credit Index is an unmanaged, weighted average composite composed of 60% S&P 500 Index (measuring U.S. equities) and 40% Lehman Brothers Intermediate Gov’t/Credit Index (measuring U.S. bonds with maturities of at least one year). • 60% Russell 1000 Value Index/40% Lehman Brothers Aggregate Bond Index in an unmanaged, weighted average composite composed of 60% Russell 1000 Value Index and 40% Lehman Brothers Aggregate Bond Index (measuring U.S. bonds with maturities of at least one year) • 60% Russell 1000 Value Index/40% Lehman Brothers Intermediate Gov’t/Credit Index in an unmanaged, weighted average composite composed of 60% Russell 1000 Value Index and 40% Lehman Brothers Intermediate Gov’t/Credit Index (measuring U.S. bonds with maturities of at least one year). • 60% Russell 1000 Growth Index/40% Lehman Brothers Aggregate Index in an unmanaged, weighted average composite composed of 60% Russell 1000 Growth Index and 40% Lehman Brothers Aggregate Index (measuring U.S. bonds with maturities of at least one year). • 60% Russell 1000 Growth Index/40% Lehman Brothers Intermediate Gov’t/Credit Index in an unmanaged, weighted average composite composed of 60% Russell 1000 Growth Index and 40% Lehman Brothers Intermediate Gov’t/Credit Index (measuring U.S. bonds with maturities of at least one year). • 60% Russell 1000 Index/40% Lehman Brothers Aggregate Index in an unmanaged, weighted average composite composed of 60% Russell 1000 Index and 40% Lehman Brothers Aggregate Index (measuring U.S. bonds with maturities of at least one year). • Lifetime Funds Custom Benchmarks are composite benchmarks that reflect the weighted average of the benchmarks for the underlying Funds (in which the Lifetime Fund invests.) • Retirement Goal Funds Custom Benchmarks are composite benchmarks that reflect the weighted average of the benchmarks for the underlying Fund s (in which the Retirement Goal Fund invests.) • Prudential/Lazard LifeStyle Funds Custom Benchmarks are composite benchmarks that reflect the weighted average of the benchmarks for the underlying Funds (in which the Prudential/Lazard LifeStyle Fund invests.) • iMoneyNet All Taxable Average includes all taxable retail and institutional money funds. Consists of funds in the Treasury Retail, Treasury Institutional, Treasury & Repo Retail, Treasury & Repo Institutional, Government & Agency Retail, Government & Agency Institutional, First Tier Retail, First Tier Institutional, Second Tier Retail, and Second Tier Institutional categories. • iMoneyNet All Taxable Average +100 basis points is the returns of the iMoneyNet All Taxable Average plus 100 basis points. • 5-Year U.S. Treasury Note is the average weekly yield for U.S. Treasuries with a maturity of five years (negotiable debt obligations of the U.S. Government, considered intermediate in maturity) • NAREIT is an unmanaged market-capitalization-weighted index of all tax-qualified equity REIT’s listed in the NYSE, AMEX and the Nasdaq that have 75% or more of their gross invested book assets directly or indirectly in the equity ownership of real estate.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 48 FOURTH QUARTER 2006 PERFORMANCE NOTES

Investment Performance Notes

Important Information about Investment Product Performance

Categories are constructed and maintained by Morningstar, Inc. Category medians are calculated by using MPI Stylus, Inc. and may differ from those provided by Morningstar. Fund and index rankings within a Morningstar category are calculated by using MPI Stylus and may differ from those provided by Morningstar. Morningstar Categories are constructed by removing duplicate share classes. In general the share class with the longest history is used for category construction.

Fund Specific Footnotes

High Grade Bond / BSAM Fund - The Separate Account was established in 11/1/1999. Results are net of the highest management fee (0.40%) and other operating expenses (0.02% for 2005) charged for this Fund, but before any contract-related expenses. "Since Inception returns" for this Fund are based on an inception date of 10/31/1999.

International Blend / The Boston Company Fund - The Separate Account was established in 12/5/1997. Results are net of the highest management fee (1.00%) and other operating expenses (0.07% for 2005) charged for this Fund, but before any contract-related expenses. Effective 11/12/2004, The Boston Company replaced Bank of Ireland Asset Management (U.S.) Ltd. as sub- adviser for the Fund. Performance prior to 11/12/2004 is that of Bank of Ireland Asset Management (U.S.) Ltd.

Large Cap Blend / Victory Fund - The Separate Account was established in 1/31/1992. Results are net of the highest management fee (0.55%) and other operating expenses (0.00% for 2005) charged for this Fund, but before any contract-related expenses. Effective 9/1/2004, Victory Capital Management assumed portfolio management responsibilities for the Fund. All performance prior to 9/1/2004 is that of a multi-manager structure administered by Connecticut General Life Insurance Company.

Large Cap Growth / Turner Investment Partners - The Separate Account was established in 5/31/1998. Results are net of the highest management fee (0.75%) and other operating expenses (0.00% for 2005) charged for this Fund, but before any contract-related expenses. Effective 7/26/2004, Turner Investment Partners replaced Morgan Stanley Asset Management as sub- adviser for the Fund. Performance prior to 8/2004 is that of Morgan Stanley Asset Management.

Large Cap Growth / Waddell & Reed Fund - The Separate Account was established 3/1/2004. Results are net of the management fee (0.80%) charged for this fund but do not take into consideration other operating expenses (0.00% projected for 2005). Performance prior to 3/1/2004 represents the manager's composite, which is comprised of portfolios that are managed pursuant to a similar investment strategy, is net of the management fee for this fund (0.80%) but does not take into consideration other operating expenses. "Since Inception" returns are based on an inception of 6/30/1998.

Large Cap Value / LSV Asset Management Fund - The Separate Account was established 7/19/2002. Results are net of the management fee (0.75%) charged for this fund but do not take into consideration other operating expenses (0.02% for 2005). Performance prior to 7/19/2002 represents the manager's composite, which is comprised of portfolios that are managed pursuant to a similar investment strategy, is net of the management fee for this fund (0.75%) but does not take into consideration other operating expenses.

Mid Cap Growth / Goldman Sachs Fund - The Separate Account was established 6/30/2004. Results are net of the management fee (0.85%) charged for this fund but do not take into consideration other operating expenses (0.00% for 2005). Performance prior to 6/30/2004 represents the manager's composite, which is comprised of portfolios that are managed pursuant to a similar investment strategy, is net of the management fee for this fund (0.85%) but does not take into consideration other operating expenses. "Since Inception" returns are based on an inception of 5/31/1999.

Mid Cap Value / Cooke & Bieler Fund - The Separate Account was established 6/30/2004. Results are net of the management fee (0.80%) charged for this fund but do not take into consideration other operating expenses (0.00% for 2005). Performance prior to 6/30/2004 represents the manager's composite, which is comprised of portfolios that are managed pursuant to a similar investment strategy, is net of the management fee for this fund (0.80%) but does not take into consideration other operating expenses. "Since Inception" returns are based on an inception of 2/28/1998.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 49 FOURTH QUARTER 2006 PERFORMANCE NOTES

Prudential Short-Term Bond Fund - The Separate Account was established in 6/30/1976. Results are net of the highest management fee (0.40%) and other operating expenses (0.02% for 2005) charged for this Fund, but before any contract-related expenses.

Small Cap Growth / TimesSquare Fund - The Separate Account was established in 12/4/1997. Results are net of the highest management fee (0.90%) and other operating expenses (0.00% for 2005) charged for this Fund, but before any contract-related expenses. "Since Inception returns" for this Fund are based on an inception date of 11/30/1997.

Small Cap Value / MEA Fund - The Separate Account was established in 12/5/1997. Results are net of the highest management fee (0.90%) and other operating expenses (0.00% for 2005) charged for this Fund, but before any contract-related expenses. Performance prior to 1/1998 represents the Perkins, Wolf, McDonnell Small Cap Value Fund (prior to 5/1/2003 named Berger Small Cap Value) Institutional Shares, a mutual fund managed pursuant to a similar investment, is net of the highest management fee for this fund (0.90%) but does not take into consideration other operating expenses.

Small Cap Value/Kennedy Capital Fund - The Separate Account was established in 1/29/2001. Results are net of the highest management fee (0.90%) and other operating expenses (0.00% for 2005) charged for this Fund, but before any contract-related expenses. Effective 1/5/2005, Kennedy Capital Management replaced TCW Asset Management Company as sub-adviser for the Fund. Performance prior to 1/2005 is that of TCW Asset Management Company.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 50 FOURTH QUARTER 2006 GLOSSARY & NOTES

Glossary

Alpha

A measure of value added by a manager as compared to a passive portfolio with the same market sensitivity or beta. Alpha is a measure of return for residual, or non-market, risk, and is used to measure a manager's contribution to performance due to security or sector selection.

DDA

The Due Diligence Advisor Program employs a disciplined process to select, evaluate, and monitor the institutional sub-advised and mutual fund-based investment offerings. This Program helps to ensure that investments offered by Prudential Retirement are highly competitive and meet the varied investment requirements of retirement plan sponsors and their employees, as well as retirement plan consultants. The “Due Diligence Quartile Rank” provides an overall rank for each manager within the relevant style universe (e.g. Large Cap Stock – Growth). Each Fund is assessed on the basis of nominal risk-adjusted returns, and downside risk (versus and appropriate benchmark). These metrics are weighted based on 1-, 3-, and 5-year results with greatest emphasis place on long-term timeframes. Criteria are then used to generate an overall rating that determines a quartile distribution for the Fund within its peer group on a quarterly basis.

Expense Ratio

The expense ratio is the percentage of fund assets paid for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the Fund. Expense ratios are reflected in the funds’ performance. Sales charges are not included in the expense ratio.

Growth Stocks

Investors employing a growth investment strategy buy stocks of companies with a recent history of increasing earnings, in anticipation that earnings momentum will continue. Growth stocks are often characterized by high valuation ratios (e.g., price-to-earnings ratios). See also: value stocks.

Risk

This statistic measures the volatility of a stream of data compared to its average value. Applied to investment performance, standard deviation measures how “choppy” the monthly returns are over a period of time. 66% of all monthly values would fall within one standard deviation of the average, while 95% of all values would fall within two standard deviations of the average.

Sharpe Ratio

This statistic measures the quality of the returns for an investment on a risk-adjusted basis over a given period. It is defined as the excess returns of an investment divided by the standard deviation of returns. Excess returns are the returns of the investment minus the risk-free rate of return offered in the market, typically measured by short-term government instruments such as 3-month T-Bills. For two funds to have the same Sharpe Ratio, the fund with greater volatility must also deliver greater returns. Sharpe Ratio = Excess Returns/Risk = (Returns on the Investment - Returns on T-Bills) / Standard Deviation Value Stocks

Investors employing a value investment strategy buy stocks of companies they believe are under-priced based on their fundamental ability to generate earnings, in anticipation that the price performance of the stock will reverse. Value stocks are often characterized by low valuation ratios (e.g., price-to-earnings ratios). See also: growth stocks.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 51 FOURTH QUARTER 2006 GLOSSARY & NOTES

Glossary

Risk-Return Charts

Investors who choose to take on additional risk do so in anticipation of higher returns. The risk-return charts are often used to compare investment performance to a benchmark on a risk-adjusted basis. A benchmark (typically an index or market average) is plotted on the chart along with a risk-free rate of return.

The line between these points represents all investments with risk-adjusted return equal to the benchmark. Investment vehicles such as mutual funds can then be plotted and compared. Points above the line represent higher risk-adjusted performance than the benchmark; points below the line represent lower risk-adjusted performance. In addition to a specific investment, a comparative universe of investments can be plotted (e.g., all funds covered by Morningstar in the same category).

See also: Sharpe Ratio

Style Analysis Charts

In 1988, Nobel Laureate William F. Sharpe developed the theory of returns based style analysis. Returns based style analysis determines a manager’s style, both past and present, by comparing the manager’s performance to the returns of selected style-pure indices.

For US equity investments, Russell indices are typically used to show correlation to value/growth style and large/small stocks. Circles are plotted based on how well the manager’s performance correlates with the style indices over time. Larger circles represent more recent time periods.

Note that this type of analysis examines past returns, not the current portfolio composition or stated investment objectives.

Fund Rank Charts

In order to measure a fund’s performance relative to a style specific benchmark and peer group or universe, funds and benchmarks are plotted relative to where they would rank within a given fund category. For example, the top line of the bar (light green shading) indicates the top 5th percentile return of the category. The 25th percentile return of the category is indicated by the second line (where the dark green shading begins). The median or 50th percentile return of the category is indicated by the third line (where the dark red shading begins). The 75th percentile return of the category is indicated by the fourth line (where the light red shading begins). The bottom line of the bar indicates the 95th percentile return of the category.

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 52 FOURTH QUARTER 2006 GLOSSARY & NOTES

Important Information About Prudential and its Businesses

Prudential Retirement and Prudential Financial are service marks of The Prudential Insurance Company of America, Newark, NJ and its affiliates. Prudential Retirement and Prudential Financial are registered service marks of The Prudential Insurance Company of America, Newark, NJ and its affiliates.

INST-20061026-A018023

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 53 FOURTH QUARTER 2006 APPENDIX

Fund Performance

Past performance does not guarantee future results. This material is for plan sponsor use only and cannot be reproduced or shown to members of the public. 54 Commissioner of Charles County, Maryland Pension Plan Defined Benefit Fund Performance as of December 31, 2006 with February 28, 2007 update

The investments below represent investments into a separate account. Any reference to share class refers to the underlying investment of the separate account and does not indicate that this is an investment directly into this share class.

CUMULATIVE RETURNS AVERAGE ANNUAL TOTAL RETURNS Inception YTD AS OF DECEMBER 31, 2006 AS OF DECEMBER 31, 2006 Since Risk Alpha Sharpe DDA Rank Expense Fund/Benchmark Name Date 02/28/07 1 MO. 3 MOS. YTD 1 YR 3 YRS 5 YRS 10 YRS Inception 5 YRS 5 YRS 5 YRS 12/31/06 Ratio* LARGE CAP STOCK - VALUE Large Cap Value Fund (sub-advised by Wellington Management) 9/29/00 -0.72 1.87 7.48 16.10 16.10 13.60 9.32 11.15 N/A 12.28 -1.29 0.59 2 0.75% Large Cap Value / AJO Fund 8/1/97 -0.23 2.62 7.72 18.89 18.89 11.71 5.71 N/A 7.83 13.94 -5.45 0.29 4 0.75% AJO Large Cap - Absolute Value Composite Results [not a fund]* 12/31/95 -0.23 2.62 7.72 18.89 18.89 15.57 12.15 14.41 N/A 11.41 2.08 0.85 2 0.75% Large Cap Value / Barrow Hanley Fund 3/28/02 -0.05 2.65 7.05 16.92 16.92 14.81 11.44 11.15 N/A 10.98 1.76 0.82 1 0.76% Large Cap Value / LSV Asset Management Fund 7/19/02 0.52 1.75 7.64 21.75 21.75 17.31 14.13 13.48 N/A 12.25 3.37 0.94 1 0.77% Russell 1000 Value Index -0.30 2.24 8.00 22.25 22.25 15.09 10.86 11.00 N/A 12.29 0.00 0.70 N/A - Morningstar Large Cap Value Category Median 0.06 2.02 7.27 18.49 18.49 12.56 8.53 9.16 N/A 12.27 -1.94 0.52 N/A - LARGE CAP STOCK - BLEND Large Cap Blend / AJO Fund 1/31/95 -0.36 1.99 7.28 16.44 16.44 7.72 2.89 5.81 N/A 13.29 -3.90 0.09 4 0.75% Aronson + Johnson + Ortiz AJO Large Cap Composite Results [not a fund]* 4/30/92 -0.36 1.99 7.28 16.44 16.44 11.52 7.77 11.35 N/A 11.39 1.28 0.50 1 0.75% Large Cap Blend / Victory Fund 1/31/92 -0.18 0.05 7.42 14.01 14.01 11.11 4.56 7.57 N/A 14.03 -2.47 0.21 4 0.55% Victory Diversified Equity Composite Results [not a fund]* 10/31/89 -0.18 0.05 7.42 14.01 14.01 11.66 8.04 11.42 N/A 14.56 0.78 0.43 2 0.55% Russell 1000 Index 0.17 1.28 6.95 15.46 15.46 10.98 6.82 8.64 N/A 12.33 0.00 0.40 N/A - Morningstar Large Cap Blend Category Median 0.41 1.33 6.64 14.60 14.60 10.13 5.98 8.00 N/A 12.37 -0.78 0.33 N/A - Dryden S&P 500 Index Fund 12/31/87 -0.51 1.39 6.62 15.65 15.65 10.26 6.02 8.24 N/A 12.39 -0.16 0.33 N/A 0.22% S&P 500 Index -0.47 1.40 6.70 15.79 15.79 10.44 6.19 8.42 N/A 12.40 0.00 0.35 N/A - State Street Global Advisors Russell 3000® Index SL Series Fund 1/1/97 0.22 1.17 7.02 15.46 15.46 10.95 6.85 8.51 N/A 12.48 -0.29 0.40 N/A 0.25% Russell 3000 Index 0.23 1.20 7.12 15.72 15.72 11.19 7.17 8.64 N/A 12.52 0.00 0.42 N/A - LARGE CAP STOCK - GROWTH Large Cap Growth Fund (sub-advised by Wellington Mgmt.) 1/29/01 -1.63 -0.17 4.54 4.18 4.18 4.21 0.33 N/A -4.71 12.36 -2.31 -0.11 4 0.81% Wellington Management Growth Strategy Composite Results [not a fund]* 12/31/84 -1.63 -0.17 4.54 4.18 4.18 7.05 4.49 7.13 N/A 14.12 1.74 0.20 3 0.81% Large Cap Growth / Jennison Fund 10/20/04 0.25 0.41 4.62 2.63 2.63 8.60 3.05 7.21 N/A 14.48 0.47 0.11 2 0.84% Large Cap Growth / Turner Investment Partners Fund 5/31/98 0.55 -0.01 5.40 9.00 9.00 10.56 4.01 N/A 3.68 13.65 1.36 0.17 2 0.75% Turner Investment Partners Core Growth Equity Composite Results [not a fund]* 3/31/90 0.55 -0.01 5.40 9.00 9.00 11.11 6.21 8.68 N/A 14.26 3.49 0.32 1 0.75% Large Cap Growth / Waddell & Reed Fund 3/1/04 0.21 -0.32 5.09 5.32 5.32 6.20 3.40 N/A 6.82 12.53 0.73 0.13 3 0.80% Russell 1000 Growth Index 0.64 0.34 5.93 9.07 9.07 6.87 2.69 5.44 N/A 13.17 0.00 0.08 N/A - Morningstar Large Cap Growth Category Median 0.45 0.13 5.49 7.24 7.24 7.06 2.94 6.24 N/A 13.55 0.41 0.10 N/A -

For Plan Sponsor Use Only. *Please see footnote section for more information. 55 CUMULATIVE RETURNS AVERAGE ANNUAL TOTAL RETURNS Inception YTD AS OF DECEMBER 31, 2006 AS OF DECEMBER 31, 2006 Since Risk Alpha Sharpe DDA Rank Expense Fund/Benchmark Name Date 02/28/07 1 MO. 3 MOS. YTD 1 YR 3 YRS 5 YRS 10 YRS Inception 5 YRS 5 YRS 5 YRS 12/31/06 Ratio* MID CAP STOCK - VALUE Mid Cap Value / Cooke & Bieler Fund 6/30/04 1.47 1.53 9.60 26.34 26.34 15.07 14.27 N/A 14.86 13.98 -1.87 0.85 3 0.80% Mid Cap Value / Integrity Fund 6/1/05 2.15 0.44 7.40 17.30 17.30 16.80 N/A N/A 17.13 N/A N/A N/A 1 0.81% Russell MidCap Value Index 3.70 1.02 8.50 20.22 20.22 18.77 15.88 13.65 N/A 12.40 0.00 1.06 N/A - Morningstar Mid Cap Value Category Median 3.02 0.97 7.93 16.19 16.19 14.67 11.98 11.48 N/A 12.92 -3.45 0.75 N/A - MID CAP STOCK - GROWTH Mid Cap Growth / Goldman Sachs Fund 6/30/04 4.01 -1.55 7.16 6.71 6.71 9.49 5.11 N/A 13.67 15.64 -2.67 0.24 3 0.85% Russell MidCap Growth Index 3.42 -0.90 6.95 10.66 10.66 12.73 8.22 8.62 N/A 15.76 0.00 0.42 N/A - Morningstar Mid Cap Growth Category Median -0.38 6.90 9.05 9.05 11.20 6.84 8.92 N/A 15.28 -0.74 0.34 N/A - SMALL CAP STOCK - VALUE Small capitalization securities are subject to market, liquidity, and information risk. The price of the Fund's investments may go down and you could lose money on your investment. Small company securities may underperform, as compared to the securities of larger companies, and may also pose greater risk due to narrow product lines, limited financial resources, less depth in management or a limited trading market for their securities. Small Cap Value / Kennedy Capital Fund 1/29/01 4.04 1.07 12.05 18.07 18.07 7.55 7.89 N/A 7.53 23.70 -9.79 0.33 4 0.90% Kennedy Extended Small Cap Value Composite Results [not a fund]* 12/31/97 4.04 1.07 12.05 18.07 18.07 16.88 17.68 N/A 15.51 16.77 1.83 0.91 2 0.90% Small Cap Value / MEA Fund 12/5/97 1.59 1.12 8.18 9.59 9.59 10.62 9.45 N/A 13.01 15.35 -4.42 0.50 4 0.90% MEA Small Cap Value Composite Results [not a fund]* 1/31/97 1.59 1.12 8.18 13.77 13.77 14.31 16.15 N/A 14.12 15.49 1.04 0.90 3 0.90% Small Cap Value / Mellon Equity Fund 12/30/05 1.92 1.20 8.43 13.95 13.95 14.29 16.10 14.21 N/A 15.45 1.00 0.88 2 1.02% Small Cap Value / Opus Capital Fund 12/30/05 2.44 -0.70 5.74 8.98 8.98 13.83 16.35 13.41 N/A 16.69 1.21 0.84 3 1.02% Russell 2000 Value Index 0.25 0.87 9.03 23.48 23.48 16.48 15.37 13.27 N/A 15.72 0.00 0.83 N/A - Morningstar Small Cap Value Category Median 1.50 0.82 8.59 16.78 16.78 14.76 13.90 12.83 N/A 14.86 0.04 0.80 N/A - SMALL CAP STOCK - GROWTH Small capitalization securities are subject to market, liquidity, and information risk. The price of the Fund's investments may go down and you could lose money on your investment. Small company securities may underperform, as compared to the securities of larger companies, and may also pose greater risk due to narrow product lines, limited financial resources, less depth in management or a limited trading market for their securities. Small Cap Growth / Essex Fund 3/31/06 3.91 2.62 8.05 9.49 9.49 13.62 14.58 N/A 15.76 20.93 7.03 0.64 1 1.02% Small Cap Growth / Granahan Fund 3/28/02 2.74 -0.80 5.82 8.86 8.86 10.32 6.42 9.45 N/A 16.93 -0.02 0.30 3 0.93%* Small Cap Growth / TimesSquare Fund 12/4/97 0.84 -0.21 6.21 13.53 13.53 12.15 9.38 N/A 12.22 14.38 3.24 0.54 2 0.90% Russell 2000 Growth Index 1.54 -0.24 8.77 13.35 13.35 10.51 6.93 4.88 N/A 19.36 0.00 0.31 N/A - Morningstar Small Cap Growth Category Median 2.16 0.00 7.87 10.76 10.76 9.89 7.02 8.77 N/A 17.88 0.59 0.33 N/A - INTERNATIONAL STOCK - VALUE Foreign securities are subject to special risks, such as currency fluctuation, political instability, and the potential for illiquid markets. International Value / LSV Fund 1/5/05 2.00 4.00 11.61 31.63 31.63 24.11 23.04 N/A 14.86 12.61 6.72 1.52 1 1.07% MSCI EAFE Value Index (net) 1.40 3.47 11.29 30.38 30.38 22.64 17.65 10.18 N/A 14.48 0.00 1.03 N/A - Morningstar Foreign Large Value Category Median 0.47 3.26 10.06 26.79 26.79 20.81 16.82 10.85 N/A 13.82 0.45 1.01 N/A - INTERNATIONAL STOCK - BLEND Foreign securities are subject to special risks, such as currency fluctuation, political instability, and the potential for illiquid marke International Blend / The Boston Company Fund 12/5/97 0.42 4.18 12.02 30.54 30.54 21.11 13.16 N/A 8.25 14.36 -1.99 0.77 3 1.07% The Boston Company International Core Composite Results [not a fund]* 12/31/96 0.42 4.18 12.02 30.54 30.54 24.23 20.71 11.85 11.84 12.40 6.14 1.40 1 1.07% International Blend / Pictet Asset Management 1/19/07 2.34 4.81 14.76 35.74 35.74 28.08 19.20 10.56 N/A 14.91 2.81 1.10 N/A 1.10% State Street Global Advisors Daily EAFE SL Series Fund 12/31/96 1.43 3.08 10.20 25.92 25.92 19.57 13.81 6.87 N/A 13.67 -1.15 0.84 N/A 0.40% MSCI EAFE Index (net) 1.49 3.14 10.35 26.34 26.34 19.93 14.98 7.71 N/A 13.51 0.00 0.92 N/A - Morningstar Foreign Large Blend Category Median 1.05 3.20 10.27 25.32 25.32 19.08 13.68 7.53 N/A 13.69 -1.04 0.84 N/A - Dryden Emerging Markets Fund 8/31/95 -1.72 4.50 18.60 33.14 33.14 30.35 25.36 9.20 N/A 17.84 -0.76 1.23 3 1.16% MSCI Emerging Market Index -1.66 4.51 17.64 32.59 32.59 30.97 26.97 9.40 N/A 18.08 0.00 1.29 N/A - Morningstar Emerging Markets Category Median -1.45 4.61 17.55 32.52 32.52 29.90 26.47 10.07 N/A 18.21 0.24 1.28 N/A - Investing in emerging markets is generally riskier than investing in foreign securities. Emerging-market countries may have unstable governments and/or economies that are subject to sudden change. These changes may be magnified by the countries’ emergent financial markets, resulting in significant volatility to investments in these countries. These countries also may lack the legal, business, and social framework to support securities markets.

For Plan Sponsor Use Only. *Please see footnote section for more information. 56 CUMULATIVE RETURNS AVERAGE ANNUAL TOTAL RETURNS Inception YTD AS OF DECEMBER 31, 2006 AS OF DECEMBER 31, 2006 Since Risk Alpha Sharpe DDA Rank Expense Fund/Benchmark Name Date 02/28/07 1 MO. 3 MOS. YTD 1 YR 3 YRS 5 YRS 10 YRS Inception 5 YRS 5 YRS 5 YRS 12/31/06 Ratio* INTERNATIONAL STOCK - GROWTH Foreign securities are subject to special risks, such as currency fluctuation, political instability, and the potential for illiquid marke Dryden International Growth Fund 6/30/84 1.39 3.55 10.28 26.40 26.40 21.11 15.88 7.23 N/A 13.27 3.16 1.00 1 0.98% International Growth / Artisan Partners Fund 2/28/01 0.69 3.53 10.50 25.40 25.40 19.39 12.13 N/A 7.75 14.27 -0.79 0.71 3 1.04% Artisan International Growth Equity Composite Results [not a fund]* 12/31/89 0.71 3.53 10.50 25.40 25.40 19.39 12.26 12.77 14.03 15.22 -1.15 0.67 3 1.04% International Growth / Hansberger Global Investors Fund 5/31/06 -0.10 2.91 11.21 24.04 24.04 18.10 14.63 10.91 N/A 15.12 1.15 0.82 2 1.10% MSCI EAFE Growth Index (net) 1.58 2.80 9.40 22.33 22.33 17.18 12.27 5.07 N/A 12.83 0.00 0.78 N/A - Morningstar Foreign Large Growth Category Median 0.74 3.40 11.12 23.40 23.40 18.17 12.92 7.53 N/A 14.14 -0.06 0.72 N/A - SPECIAL EQUITY - REAL ESTATE Sector funds are subject to risks within their specific sectors because they concentrate their investments in securities of companies within those industries. Therefore, the prices of these securities can be volatile CIGNA Realty Investors Open-End Real Estate 10/31/81 N/A N/A -0.96 -6.70 -6.70 12.94 9.22 10.38 N/A N/A N/A N/A N/A 1.10% Prudential Property Investment Separate Account** - N/A N/A 3.62 15.22 15.22 17.18 12.94 13.15 N/A N/A N/A N/A N/A - NCREIF N/A N/A 4.51 16.59 16.59 17.02 13.27 12.72 N/A N/A N/A N/A N/A - American Century Real Estate Fund 9/21/95 5.67 -1.56 9.07 34.69 34.69 26.53 24.47 15.41 17.57 13.66 1.97 1.51 2 1.15% NAREIT EQUITY Index 5.99 -1.56 9.46 35.05 35.05 25.85 23.19 14.48 N/A 14.28 0.00 1.37 N/A - Morningstar Specialty Real Estate Category Median 0.29 -1.37 9.76 35.19 35.19 26.62 23.78 15.17 N/A 13.87 0.90 1.42 N/A - BALANCED - VALUE Balanced I Fund (sub-advised by Wellington Management) 11/30/99 0.78 1.34 4.42 15.29 15.29 9.87 7.25 6.52 N/A 7.52 -1.47 0.64 1 0.71% Wellington Balanced Blended Results [not a fund]* 12/31/88 0.78 1.34 4.42 15.29 15.29 9.87 7.25 9.10 N/A 7.52 -1.47 0.64 N/A 0.71% 60% Russell 1000 Value / 40% LB Aggregate 0.43 1.11 5.26 14.81 14.81 10.47 8.75 9.37 N/A 7.18 0.00 0.86 N/A - Morningstar Conservative & Moderate Allocation Category Median 0.79 0.63 4.56 10.40 10.40 7.89 6.26 7.13 N/A 7.46 -1.82 0.56 N/A - FIXED INCOME - DOMESTIC Core Bond Enhanced Index / PIM Fund 3/15/99 1.52 -0.64 1.13 3.97 3.97 3.46 5.00 N/A 5.69 3.88 -0.09 0.63 2 0.37% PIM Enhanced Bond Index Composite [not a fund]* 12/31/88 1.52 -0.64 1.13 3.97 3.97 3.41 4.85 6.05 N/A 3.84 -0.21 0.60 2 0.37% Core Bond / Blackrock Fund 4/3/02 1.39 -0.51 0.97 3.97 3.97 3.37 4.60 6.03 N/A 3.61 -0.27 0.57 4 0.48% Core Bond / BSAM Fund 12/15/98 1.57 -0.69 1.10 3.96 3.96 3.37 4.94 6.11 N/A 3.72 -0.05 0.64 2 0.42% Core Plus Bond / BSAM Fund 11/1/99 1.79 -0.64 1.31 4.71 4.71 3.71 5.58 N/A 6.45 3.65 0.67 0.81 2 0.44% Core Plus Bond / PIMCO Fund 7/19/02 1.55 -0.98 0.79 3.88 3.88 3.87 5.50 6.72 N/A 3.96 0.39 0.74 3 0.49% High Grade Bond / BSAM Fund 11/1/99 1.58 -0.69 1.15 4.13 4.13 3.54 5.19 N/A 6.44 3.67 0.25 0.76 1 0.42% Lehman Brothers Aggregate Bond Index 1.50 -0.58 1.24 4.33 4.33 3.70 5.06 6.24 N/A 3.82 0.00 0.66 N/A - Morningstar Intermediate-Term Bond Category Median 1.53 -0.51 1.22 4.12 4.12 3.47 4.76 5.78 N/A 3.74 -0.17 0.59 N/A - Corporate Bond / BSAM Fund 1/1/97 2.72 -0.81 1.45 4.35 4.35 3.60 6.04 6.58 N/A 4.94 0.18 0.70 2 0.42% Lehman Brothers U.S. Credit Index 2.00 -0.86 1.34 4.26 4.26 3.81 5.90 6.56 N/A 4.94 0.00 0.68 N/A - Morningstar Corporate Bond General Category Median 1.46 -0.41 1.25 4.22 4.22 3.44 4.71 5.64 N/A 3.67 -0.17 0.59 N/A - Prudential America Fund 8/1/94 1.77 -0.53 1.06 3.65 3.65 4.00 5.75 6.40 N/A 4.57 0.63 0.70 N/A 0.40% State Street Global Advisors Government Credit Bond NL Series Fund 2/15/97 1.08 -0.70 1.08 3.74 3.74 3.30 5.03 5.94 N/A 4.66 -0.14 0.54 2 0.35% Lehman Brothers U.S. Gov/Credit Index 1.64 -0.76 1.04 3.78 3.78 3.44 5.17 6.26 N/A 4.63 0.00 0.57 N/A - Morningstar Intermediate-Term Bond Category Median 1.53 -0.51 1.22 4.12 4.12 3.47 4.76 5.78 N/A 3.74 0.13 0.59 N/A - Private Placement Fund 12/31/77 1.43 -0.38 1.06 4.05 4.05 4.07 5.34 6.25 N/A 3.20 0.96 0.90 1 0.41% State Street Global Advisors Passive Intermediate Bond Index SL Series Fund 12/1/96 0.86 -0.31 1.18 4.27 4.27 2.91 4.43 5.61 N/A 3.47 -0.11 0.55 2 0.35% Lehman Brothers Gov/Credit Intermediate Index 1.42 -0.41 1.03 4.08 4.08 2.90 4.53 5.81 N/A 3.43 0.00 0.58 N/A - Morningstar Intermediate-Term Bond Category Median 1.53 -0.51 1.22 4.12 4.12 3.47 4.76 5.78 N/A 3.74 0.12 0.59 N/A - Prudential Short-Term Fund 6/30/76 5.77 0.29 1.13 4.68 4.68 2.91 2.28 3.74 N/A 0.41 -0.07 -1.00 N/A 0.42% iMoneyNet Taxable Money Funds - Net 4.74 0.39 1.17 4.41 4.41 2.59 1.93 3.34 N/A 0.42 0.00 -10.33 N/A - Citigroup Three Month T-Bill 5.11 0.42 1.25 4.76 4.76 2.99 2.35 3.67 N/A 0.40 0.44 -2.65 N/A - Morningstar Ultra Short Bond Category Median 0.83 0.30 1.23 4.74 4.74 2.91 2.61 4.22 N/A 0.72 0.51 0.15 N/A - STABLE VALUE Guaranteed Deposit Fund 2006 Old Money Rate: 4.92%; New Money Rate: 4.45% - 2007 Old Money Rate: 4.50%; New Money Rate: 4.35% N/A - iMoneyNet Taxable Money Funds - Net 4.74 0.39 1.17 4.41 4.41 2.59 1.93 3.34 N/A 0.42 0.00 -10.33 N/A - Citigroup Three Month T-Bill 5.11 0.42 1.25 4.76 4.76 2.99 2.35 3.67 N/A 0.40 0.44 -2.65 N/A - Avg 5 Yr Treasury Note Yield 0.34 0.39 1.13 4.71 4.71 4.05 3.76 4.64 N/A 0.20 2.48 5.14 N/A -

For Plan Sponsor Use Only. *Please see footnote section for more information. 57 Footnotes

Your current funds are highlighted in yellow. Funds for your consideration are highlighted in blue. **Outside Fund information offered through other firms was provided by the fund’s custodian or from publicly available sources.

Performance data represents past performance and is not necessarily indicative of future results.

Funds offered by Prudential may be closed to new investors or new contributions at any time without prior notice.

All returns are net of the management fees charged for the separate account and net of other operational expenses and are before any contract charges, if any, unless noted otherwise. Historical returns reflect actual account performance and the investment manager’s composite, which may consist of one account. Performance is representative of each separate account’s investment management discipline. All returns are deemed accurate at the time of reporting but are subject to change. For more information, please contact your Prudential Retirement Representative at 1-877-778-2100.

Composite Performance represents past performance of the investment adviser managing investments of a similar style and strategy, and is not representative of, nor a substitute for, the performance of the Separate Account.

AJO Large Cap - Absolute Value Compsite - Effective 10/1/05, Aronson + Johnson + Ortiz (AJO) replaced John A. Levin & Co.as sub-advisor of the Fund. We are providing the AJO Large Cap - Absolute Value Composite performance to provide additional information relating to AJO's capabilities. AJO's composite is comprised of portfolios that have similar investment objectives and management style as the Large Cap Value / AJO. Fund and is not available as an investment.

AJO Large Cap Composite - Effective 3/1/2005, Aronson + Johnson + Ortiz replaced INVESCO-National Asset Management as sub-adviser for the Fund. We are providing the AJO Large Cap Composite performance to provide additional information relating to Aronson + Johnson + Ortiz’s capabilities. The AJO Large Cap Composite has a similar investment objective and management style as the Large Cap Blend / AJO Fund and is not available as an investment.

Artisan International Growth Equity Composite - Effective 11/11/2003, Artisan Partners replaced Putnam Investments as the sub-adviser for the Fund. We are providing the Artisan International Growth Equity Composite performance to provide additional information relating to Artisan Partners’ capabilities. The Artisan International Growth Equity has a similar investment objective and management style as the International Growth /Artisan Partners Fund and is not available as an investment.

The Boston Company International Core Composite - Effective 11/12/2004, The Boston Company replaced Bank of Ireland Fund Asset Management (U.S.) as sub-adviser for the Fund. We are providing the Boston Company International Core Composite performance to provide additional information relating to Boston'scapabilities. The Boston Company International Core Composite has a similar investment objective and management style as the International Blend / The Boston Company Fund and is not available as an investment.

Guaranteed Deposit Fund - The Guaranteed Deposit Fund is a group annuity product issued by Prudential Retirement Insurance and Annuity Company, Hartford, CT and is backed by the full faith and creditworthiness of the issuer. Deposits made to the product are deposited in the issuer’s general account. Principal and interest are fully guaranteed by the issuer. Past performance is not indicative of future performance.

For Plan Sponsor Use Only. 58 Kennedy Extended Small Cap Value Composite - Effective 1/5/2005, Kennedy Capital Management, Inc. replaced TCW Asset Management as sub-adviser for the Fund. We are providing the Kennedy Extended Small Cap Value Composite performance to provide additional information relating to Kennedy Capital's capabilities. The Kennedy Extended Small Cap Value Composite is not available as an investment.

MEA Small Cap Value Composite - Effective 6/19/2006, Mellon Equity Associates, LLP replaced Perkins, Wolf, McDonnell as sub-adviser for the Fund.We are providing the MEA Small Cap Value Composite performance to provide additional information relating to MEA's capabilities. The MEA Small Cap Value Composite is not available as an investment.

PIM Enhanced Bond Index Composite - Effective 11/15/2004, Prudential Investment Management replaced TimesSquare Asset Management as sub-adviser for the Fund. We are providing the Prudential Investment Management Composite performance to provide additional information relating to PrudentialInvestment Management's capabilities. The PIM Enhanced Bond Index Composite has a similar investment objective and management style as the Core Bond Enhanced Index Fund and is not available as an investment.

Small Cap Growth / Granahan - For this fund, Prudential Retirement Insurance and Annuity Company (“PRIAC”)* agreed, until 12/31/2004, to waive the Fund’s “Other Expenses” to the extent they exceed 0.05% of the Fund’s average daily net assets. For 3 years after PRIAC waives any “Other Expenses”, if “Other Expenses” in any year fall below the specified limit, PRIAC shall be entitled to receive the amount of the difference.

Turner Investment Partners Core Growth Equity Composite - Effective 7/26/04, Turner Investment Partners replaced Morgan Stanley Asset Management as sub-adviser for the fund. We are providing the Turner Investment Partners Core Growth Equity Composite performance to provide additional information relating to Turner’s capabilities. The Turner Investment Partners Core Growth Equity Composite has a similar investment objective and management style as the Large Cap Growth / Turner Investment Partners Fund and is not available as an investment.

Turner Investment Partners Core Growth Equity, SSgA Composite - Effective 7/26/04, Turner Investment Partners replaced Morgan Stanley Asset Management as sub-adviser for the equity portion of the fund. We are providing the Turner Investment Partners Core Growth Equity, SSgA composite performance to provide additional information relating to Turner’s capabilities. The Turner Investment Partners Core Growth Equity, SSgA composite has a similar investment objective and management style as the Balanced / Turner Investment Partners, SSgA Fund and is not available as an investment.

Victory Diversified Large Cap Core Composite - Effective 9/1/2004, Victory Capital Management assumed portfolio management responsibilities of the Fund. We are providing the Victory Diversified Large Cap Core Composite performance to provide additional information relating to Victory's capabilities. The Victory Diversified Large Cap Core Composite has a similar investment objective and management style as the Large Cap Blend / Victory Fund and is not available as an investment.

Wellington Management Growth Strategy Composite - Effective 2/28/2005, Wellington Management Company, LLP replaced RCM Capital Management, LLC as sub-adviser for the Fund. We are providing the Wellington Management Growth Strategy performance to provide additional information relating to Wellington's capabilities. The WellingtonManagement Growth Strategy Composite has a similar investment objective and management style as the Large Cap Growth (sub-advised by Wellington Mgmt.) Fund and is not available as an investment.

Wellington Management Balanced Value Composite - Effective 10/1/2001, Wellington Management Company, LLP replaced INVESCO Capital Management, Inc. as sub-adviser for the Fund. We are providing the Wellington Management Balanced Value Composite performance to provide additional information relating to Wellington Management’s capabilities. The Wellington Management Balanced Value Composite has a similar investment objective and management style as the Balanced I / Wellington Management Fund and is not available as an investment.

For Plan Sponsor Use Only. 59 Definitions

Alpha - A measure of value added by a manager as compared to a passive portfolio with the same market sensitivity or beta. Alpha is a measure of return for residual, or non-market, risk, and is used to measure a manager's contribution to performance due to security or sector selection.

DDA Rank - The DDA Rank represents the quartile ranking assigned to the fund in the latest Due Diligence Advisor Program Report. Due Diligence Quartile Ranks shown are based on the last available Due Diligence Analysis (as of December 31, 2006), among the following peer group universe totals:

Peer Group # of Funds Peer Group # of Funds Large Cap Value 68 Balanced - Blend (Dreyfus Founders Balanced) 34 Large Cap Blend 114 Balanced - Blend (Fidelity Advisor Balanced) 59 Large Cap Growth 49 Balanced - Blend (Fidelity Asset Manager) 46 Mid Cap Value 53 Balanced - Blend (Balanced / Tactical Asset Allocation) 46 Mid Cap Blend 53 Balanced - Blend (Vanguard Balanced) 16 Mid Cap Growth 51 Balanced - Growth (Balanced Growth / Morgan Stanley, SSgA) 21 Small Cap Value 52 Balanced - Growth (Balanced Growth / Wellington, SSgA) 34 Small Cap Blend 45 Balanced - Growth (Janus Adviser Balanced) 53 Small Cap Growth 66 Balanced - Value (Balanced I / Wellington Mgmt.) 51 Real Estate 55 Balanced - Value (Alliance Balanced Shares) 73 Technology 65 Balanced - Value (Balanced Value / Wellington, SSgA) 25 Global - Value 26 Balanced - Value (Fidelity Puritan) 59 Global - Growth 18 Balanced - Value (Oakmark Equity & Income) 39 International - Value 63 Balanced - Value (Vanguard Wellington) 29 International - Blend 133 Fixed Income - Aggregate (Core Plus) 38 International - Growth 53 Fixed Income - Aggregate (High Grade) 64 Fixed Income - High Yield 63 Fixed Income - Government 47 Fixed Income - SSgA Intermediate 108

Expense Ratio - Expense Ratio includes management fee charges by the fund's Investment Manager against the fund's assets for managing the portfolio as well as for such services as shareholder relations or investment-related administration (fund analysis and research, etc.), 12(b)-1 fee [Mutual funds may charge this fee against the fund's assets to cover distribution expenses incurred by the fund], if applicable, “Other Expenses” [Charges by the fund's sponsor against the fund's assets for additional operating expenses. For example: related legal fees, auditing expenses, compliance with governmental regulations, mailing or postage costs, etc. The amount included for Prudential Institutional Sub-Advised and Proprietary Funds is actual for 2005. The amount listed for Prudential Alliance Funds is for the last period reported by the Fund’s sponsor]. Expense Ratio is prior to any contract-related charges.

Risk - This statistic measures the volatility of a stream of data compared to its average value. Applied to investment performance, standard deviation measures how “choppy” the monthly returns are over a period of time. 66% of all monthly values would fall within one standard deviation of the average, while 95% of all values would fall within two standard deviations of the average.

For Plan Sponsor Use Only. 60 Sharpe Ratio - This statistic measures the quality of the returns for an investment on a risk-adjusted basis over a given period. It is defined as the excess returns of an investment divided by the standard deviation of returns. Excess returns are the returns of the investment minus the risk-free rate of return offered in the market, typically measured by short-term government instruments such as 3-month T-Bills. For two funds to have the same Sharpe Ratio, the fund with greater volatility must also deliver greater returns. Sharpe Ratio = Excess Returns/Risk = (Returns on the Investment - Returns on T-Bills) / Standard Deviation

Shares of the mutual funds are offered by Prudential Investment Management Services, LLC (PIMS), Three Gateway Center, 14th Floor, Newark, NJ 07102- 4077. PIMS is a Prudential Financial Company.

Investors should carefully consider a fund’s investment objectives, risks, charges and expenses before investing. For more complete information about the investment options available through your plan, please call 1-800-253-2287 for a factsheet that contains this and other information about our funds. Read the factsheet carefully before investing.

Prudential Financial is a service mark of The Prudential Insurance Company of America, Newark, NJ and its affiliates.

Institutional sub-advised funds are group annuity contracts issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, a Prudential Financial company.

The performance information provided in this document is provided for the use of plan sponsors and consultants only, and is not intended for use with plan participants.

INST-20070111-A022291

For Plan Sponsor Use Only. 61 INDEX DEFINITIONS

All indexes are unmanaged. It is impossible to invest in an index.

5-Year Constant Maturity: Returns represent the average yield of Constant Maturit Lipper Mid-Cap Core Funds Index: Represents the average of the 30 largest qualifying Retirement Goal Funds Custom Benchmarks: Each Retirement Goal Fund’s composite benchmark U.S. Treasury Securities over the return period. mutual funds (based on year-end total net assets) in the Lipper Mid-Cap Universe. reflects the weighted average of the benchmarks for the underlying Funds (in which the Retirement Goal These funds, by portfolio practice, invest at least 75% of their equity assets in companies Fund invests). Lehman Brothers Aggregate Bond Index: Composed of securities from the Lehman with market capitalizations (on a three-year weighted basis) less than 300% of the dollarweighted Brothers U.S. Government/Credit Index, Mortgage-Backed Securities Index, and the median market capitalization of the middle 1,000 securities of the S&P Russell 1000® Growth Index: A market capitalization-weighted index that measure Asset-Backed Securities Index. Total return comprises price appreciation/depreciation SuperComposite 1500 Index. Mid-cap core funds have more latitude in the companies in the performance of those Russell 1000® companies with higher price-to-book ratios and and income as a percentage of the original investment. Indexes are rebalanced monthly which they invest. These funds typically have an average price-to-earnings ratio, price-to-book higher forecasted growth rates. by market capitalization. ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. Russell 1000® Index: A market-capitalization weighted index that measures the performanc Lehman Brothers High Yield Bond Index: All bonds included in the Lehman Brother of the 1,000 largest companies in the Russell 3000® Index, which represents High Yield Bond Index must be dollar-denominated and nonconvertible and have at least Lipper Mid-Cap Growth Funds Index: Represents the average of the 30 larges approximately 92% of the total market capitalization of the Russell 3000® Index. one year remaining to maturity and an outstanding par value of at least $100 million. This qualifying mutual funds (based on year-end total net assets) in the Lipper Mid-Cap index includes fixed rate, publicly issued, noninvestment-grade debt registered with the Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in Russell 1000® Value Index: A market capitalization-weighted index that measures th SEC (Securities and Exchange Commission). Pay-in-kind (PIK) bonds, Eurobonds, 144A companies with market capitalizations (on a three-year weighted basis) less than 300% performance of those Russell 1000® companies with lower price-to-book ratios and lower bonds, and debt from designated emerging market countries, are excluded. Yankees, global of the dollar-weighted median market capitalization of the middle 1,000 securities of the forecasted growth rates. bonds (SEC registered) of issuers in G-7 countries, original issue zeros and step-up S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average coupons are included. Generally, securities must be rated Ba1 or lower (including defaulted price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, Russell 2000® Growth Index: A market capitalization-weighted index that measure issuers) by Moody's Investors Service, BB+ or lower by Standard & Poor's, or below compared to the S&P MidCap 400 Index. the performance of those Russell 2000® companies with higher price-to-book ratios and investment grade by Fitch Investors Service. A small number of unrated bonds is included higher forecasted growth rates. in the index; to be eligible, they must have previously held a high yield rating or have been Lipper Mid-Cap Value Funds Index: Represents the average of the 30 larges associated with a high yield issuer and must trade accordingly. qualifying mutual funds (based on year-end total net assets) in the Lipper Mid-Cap Russell 2000® Index: A market capitalization-weighted index that measures the performanc Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in of the 2,000 smallest companies in the Russell 3000® Index, which represents Lehman Brothers Intermediate U.S. Government/Credit Index: Composed of all companies with market capitalizations (on a three-year weighted basis) less than 300% approximately 8% of the total market capitalization of the Russell 3000® Index. bonds covered by the Lehman Brothers U.S. Government Bond and U.S. Credit Indexes of the dollar-weighted median market capitalization of the middle 1,000 securities of the with maturities between 1 and 9.99 years. This index includes all publicly issued, fixed S&P SuperComposite 1500 Index. Mid-cap value funds typically have a below-average Russell 2000® Value Index: A market capitalization-weighted index that measures th rate, nonconvertible investment-grade corporate debt. Issues are rated at least Baa by price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, performance of those Russell 2000® companies with lower price-to-book ratios and lower Moody's Investors Service or BBB by Standard & Poor's, if unrated by Moody's. compared to the S&P MidCap 400 Index. forecasted growth rates. Collateralized Mortgage Obligations (CMOs) are not included. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. Lipper Science and Technology Funds Index: Represents the average of the 30 Russell 3000® Index: A market capitalization-weighted index that measures the performanc Indexes are rebalanced monthly by market capitalization. largest qualifying mutual funds in the Lipper Science and Technology universe (based on of the 3,000 largest U.S. companies based on total market capitalization, which year-end total net assets). These funds, by portfolio practice, invest at least 65% of their represents approximately 98% of the investable U.S. equity market. Lipper Balanced Funds Index: Represents the average of the 30 largest qualifying equity assets in science technology stocks. mutual funds (based on year-end total net assets) for the investment objective (to conserve Russell Midcap® Growth Index: A market capitalization-weighted index that measure principal by maintaining a balanced portfolio of stocks and bonds). Typically, the Lipper Small-Cap Core Funds Index: Represents the average of the 30 larges the performance of those Russell Midcap companies with higher price-to-book ratios stock/bond ratio ranges around 60%/40%. qualifying mutual funds (based on year-end total net assets) in the Lipper Small-Cap and higher forecasted growth rates. The stocks are also members of the Russell 1000® Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in Growth Index. Lipper Global Funds Index: Represents the average of the 30 largest qualifying mutua companies with market capitalizations (on a three-year weighted basis) less than 250% funds (based on year-end total net assets) for the investment objective (to invest at least of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the Russell Midcap® Index: A market capitalization-weighted index that measures th 25% of its portfolio in securities traded outside of the United States). These funds may S&P SuperComposite 1500 Index. Small-cap core funds have more latitude in the companies performance of the 800 smallest companies in the Russell 1000® Index, which represent own U.S. securities as well. in which they invest. These funds typically have an average price-to-earnings ratio, approximately 24% of the total market capitalization of the Russell 1000® Index. price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P Lipper High Yield Bond Funds Index: Represents the average of the 30 larges SmallCap 600 Index. Russell Midcap® Value Index A market capitalization-weighted index that measure qualifying mutual funds (based on year-end total net assets) for the investment objective the performance of those Russell Midcap companies with lower price-to-book ratios and (to seek a high [relative] current yield from fixed income securities without regard to Lipper Small-Cap Growth Funds Index: Represents the average of the 30 larges lower forecasted growth rates. The stocks are also members of the Russell 1000® Value quality or maturity restrictions). These funds tend to invest in lower-grade debt issues. qualifying mutual funds (based on year-end total net assets) in the Lipper Small-Cap Index. Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in Lipper International Funds Index: Represents the average of the 30 largest qualifying companies with market capitalizations (on a three-year weighted basis) less than 250% S&P 500® Index: (registered trademark of The McGraw-Hill Companies, Inc.) An mutual funds (based on year-end total net assets) for the investment objective (to invest of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the unmanaged index of 500 common stocks, weighted by market capitalization, representing assets in securities whose primary trading markets are outside the United States). S&P SuperComposite 1500 Index. Small-cap growth funds typically have an above-average approximately 75% of NYSE (New York Stock Exchange) capitalization and 30% of price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth NYSE issues. (Index performance includes the reinvestment of dividends and capital Lipper Large-Cap Core Funds Index: Represents the average of the 30 largest qualifying value, compared to the S&P SmallCap 600 Index. gains.) mutual funds (based on year-end total net assets) in the Lipper Large-Cap Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in companies Lipper Small-Cap Value Funds Index: Represents the average of the 30 larges S&P 500 Citigroup Value Index: Standard & Poor's and Citigroup cooperate to employ a with market capitalizations (on a three-year weighted basis) greater than 300% of the qualifying mutual funds (based on year-end total net assets) in the Lipper Small-Cap value calculation, whereby the market capitalization of the S&P 500 Index is divided dollar-weighted median market capitalization of the middle 1,000 securities of the S&P Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in equally between growth and value. The value component recognizes undervalued SuperComposite 1500 Index. Large-cap core funds have more latitude in the companies in companies with market capitalizations (on a three-year weighted basis) less than 250% companies within the S&P 500 Index, which have lower price-to-book ratios. The which they invest. These funds typically have an average price-to-earnings ratio, price-to-book of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the index is rebalanced semi-annually. ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index. S&P SuperComposite 1500 Index. Small-cap value funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, S&P Mid-Cap 400 Index: Consists of 400 domestic stocks chosen for market size Lipper Large-Cap Growth Funds Index: Represents the average of the 30 larges compared to the S&P SmallCap 600 Index. liquidity, and industry group representation. It is a market-weighted index, with each qualifying mutual funds (based on year-end total net assets) in the Lipper Large-Cap stock affecting the Index in proportion to its market value. Universe. These funds, by portfolio practice, invest at least 75% of their equity assets in Morgan Stanley Capital International (MSCI) Europe, Australia and Far Eas companies with market capitalizations (on a three-year weighted basis) greater than (EAFE) Index (net) : A market capitalization-weighted index comprised of companie S&P Small-Cap 600 Index: A capitalization-weighted index of 600 domestic stock 300% of the dollar-weighted median market capitalization of the middle 1,000 securities representative of the market structure of 21 developed market countries in Europe, chosen for market size, liquidity and industry representation. The component stocks are of the S&P SuperComposite 1500 Index. Large-cap growth funds typically have an above average Australia and the Far East. The MSCI EAFE Index is available both in local currency and weighted according to the total market value of their outstanding shares. The impact of price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share U.S. dollar terms. The returns shown in the performance chart are calculated with dividends a component's price change is proportional to the issues' total market value, which is the growth value, compared to the S&P 500 Index. reinvested and are net of foreign withholding tax. share price times the number of shares outstanding. These are summed for all 600 stocks and divided by a predetermined base value. The base value for the S&P SmallCap Lipper Large-Cap Value Funds Index: Represents the average of the 30 largest qualifying Morgan Stanley Capital International (MSCI) World Index: A market capitalization- 600 Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, mutual funds (based on year-end total net assets) in the Lipper Large-Cap Universe. weighted index comprised of companies representative of the market structure of stock rights, substitutions, etc. These funds, by portfolio practice, invest at least 75% of their equity assets in companies 23 developed market countries in North America (including the U.S.), Europe, and the with market capitalizations (on a three-year weighted basis) greater than 300% of the Asia/Pacific region. The MSCI World Index is available both in local currency and U.S. Salomon Smith Barney Three-Month Treasury Bill Index: Performance based on dollar-weighted median market capitalization of the middle 1,000 securities of the S&P dollar terms. The returns shown in the performance chart are calculated with dividends short-term securities issued by the U.S. Treasury with a maturity of 91 days, issued at a SuperComposite 1500 Index. Large-cap value funds typically have a below-average price-to- reinvested. discount from face value. The index is rebalanced monthly, based on market capitalization. earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index. Prudential/Lazard LifeStyle Funds Custom Benchmarks: Each Prudential/Lazard LifeStyle Fund’s composite benchmark reflects the weighted average of the benchmarks for the underlying Funds (in which the Prudential/Lazard LifeStyle Fund invests).

For Plan Sponsor Use Only. 62 Actuarial County Commissioners of Charles County Review Presented by: Patrick Landry, Actuarial Advisor

F O U R T H Q U A R T E R 2 0 0 6

For Plan Sponsor Use Only Table of Contents

Actuarial Review • Employer Contribution History • Funded Status • Participant Statistics • Actuarial Assumptions • Plan Provisions - Age Chart - Service Chart - Retiree Chart

• Other Considerations

For Plan Sponsor Use Only Employer Contribution History

Charles County Pension Plan Employer Contribution History

$6,000,000 $5,104,225 $5,104,225 $5,000,000 $3,911,688 $4,000,000 $3,911,688 $3,000,000 $2,000,000 $1,000,000 $0 2005 2006 Recommended Contribution Contribution Made

For Plan Sponsor Use Only Funded Status

Charles County Pension Plan $120.0 Funded Status ($ in millions) $100.0 Funding Percentage

136% N/A 82% 128% N/A 78% $80.0 $79.8

$66.4 $60.0 $62.2 $54.5 $48.7 $40.0 $40.2

$20.0 2005 2006 $0.0

Owe - Present Value of Accrued Benefits Have - Actuarial Value of Assets Need - Actuarial Accrued Liability

For Plan Sponsor Use Only Participant Statistics

07/01/2005 07/01/2006 Actives Number 748 828 Average Age 44.09 43.40 Average Employment Service 8.53 8.15 Average Salary $44,467 $48,611

Retirees Number 114 129 Average Age 69.01 69.10 Average Annual Benefit $8,027 $8,607

For Plan Sponsor Use Only Age Chart

Charles County Pension Plan Number of Active Participants by Age (as of 07/01/06)

140 125 119 120 115 97 100 87 87 80 66 58 60 52

40 18 20 4 0 <25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70+ 68

For Plan Sponsor Use Only Service Chart

Charles County Pension Plan Number of Active Participants by Service (as of 07/01/06) 400 359 350

300

250 199 200

150 113 92 100

50 32 16 16 1 0 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39

For Plan Sponsor Use Only Retiree Chart

Charles County Pension Plan Retirees as of 07/01/2006

1,600 1,400 1,269 1,200 1,000 800 665 639 661 570 608 600 482 400 246 Average Monthly Benefit 200 0 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85 and older Attained Age

70 For Plan Sponsor Use Only Assumptions

Charles County Pension Plan

Actuarial Assumptions (Contribution and Liability amounts based on these future projections)

Assumption Economic Assumptions Investment Return 8.00% Salary Scale 5.50% Cost of Living 3.25%

Demographic Assumptions Mortality RP-2000 Mortality Table

Retirement Age Public Safety Earlier of 60 or 25 years of service Others Earlier of 62/5 or 60/20

Termination Varies by age and service

For Plan Sponsor Use Only Plan Provisions

Charles County Pension Plan

Plan Provisions

Public Safety Others

Employee Contributions 7% 4%

How much Benefit Per Year of Service first 5 years 2% 1.50% next 5 2% 1.75% next 5 2% 2.00% next 5 2% 2.25% over 20 2% 2.50% Max 75% 65%

Earlier Age 60 or of: 60/20 How soon 25 years or 62/5

How long Life Life 72

For Plan Sponsor Use Only Other

Charles County Pension Plan

Other Considerations

Pension Protection Act

IRS Mortality Table

For Plan Sponsor Use Only