The Quarterly Monitoring Report Measuring investment performance for plan fiduciaries

Reviewing the Quarterly Monitoring Report As part of the StanCorp Investment Advisers, Inc. advisory service offering, The Standard delivers plan sponsors and their partners our Quarterly Monitoring Report, which details the performance of the specific investment options in their plans.

The Standard’s investment monitoring process The Standard rigorously monitors the investments it offers retirement plan clients. The process is designed to promote funds that consistently perform well compared to their peers while staying true to their investment styles. As part of the StanCorp Investment Advisers service offering, plan sponsors receive a Quarterly Monitoring Report, which measures the funds in their plans against strict monitoring criteria.

The Quarterly Monitoring Report is a helpful tool for carrying out and documenting the plan sponsor’s fiduciary responsibility. It provides a quarterly update on how the funds in the plan compare to the quantitative monitoring criteria established in the plan’s Investment Policy Statement. Three- and five-year performance, manager tenure, total assets and expenses are all measured against these criteria. The report identifies funds that are failing the criteria as well as those placed on our watch list, and if necessary, recommends possible investment changes.

Inside the Quarterly Monitoring Report The Quarterly Monitoring Report is filled with information that can help plan fiduciaries make more informed decisions about the funds they offer to their participants. The report includes the following: • Quarter Overview • Market Overviews • Asset Allocation • Asset Class Representation • Fund Suitability Monitoring • Fund Performance Tables • Fund Fact Sheets (optional) • Definitions

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Quarter Overview The “Quarter Overview” provides overall commentary on the financial markets and asset class categories over the last three months. It discusses what events influenced the markets and how the national and global economies were affected. It also presents a general economic outlook for future quarters.

Market Overviews The “Market Overviews” show how different market sectors performed over various periods of time. These pages include overviews of the broad markets as well as individual asset classes, such as: • fixed income • domestic equity

The Investment Selection and Monitoring Committee The Investment Selection and Monitoring Committee is made up of senior-level staff appointed by the heads of StanCorp Equities, Inc., Standard Retirement Services, Inc. and StanCorp Investment Advisers, Inc., a registered investment advisor. The committee meets in the month following quarter-end to review each fund’s performance and status during the preceding quarter. The committee applies strict monitoring criteria to all funds and determines any appropriate action.

• international equity Every overview includes a current market commentary and color-coded graphs that depict performance for each category. The graphs represent returns over different time periods, including: • the previous quarter • the year to date • one full year • three years • five years

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Asset Allocation The report provides a comprehensive picture of the plan’s asset allocation at the end of the quarter. The “Asset Allocation” page presents two pie charts. Macro Allocation — Provides a high-level view of the major asset categories in the plan (for example, stocks, bonds, cash). Detailed Allocation — Breaks down the plan’s allocation by individual asset classes (for example, the types of stocks or bonds that compose the portfolio). The page also lists the specific funds in each asset class, describing their weightings (as percentages of the portfolio) and current dollar values.

Asset Class Representation The “Asset Class Representation” section uses Morningstar® Investment Style BoxesTM to graphically display the funds’ investment strategies. The color-coded boxes identify each fund’s risk as either low, moderate or high. The position within the Style BoxesTM can also indicate a style change. Equity Style Box — The vertical axis shows the market capitalization of the stocks in the plan and the horizontal axis shows investment style (value, blend or growth). Fixed-Income Style Box — The vertical axis shows the average credit quality of the bonds owned, and the horizontal axis shows interest rate sensitivity as measured by a bond’s duration (short, intermediate or long). 3

Fund Suitability Monitoring The “Fund Suitability Monitoring” section compares the monitoring data of the core funds with the criteria established for the plan. This section displays the specific criteria listed in the plan’s Investment Policy Statement and provides notes and recommendations for funds that fail to meet them. Performance rank (three and five years) — The fund’s percentile rank relative to all funds in the same Morningstar® category. The highest rank is one; the lowest is 100. Manager tenure — The number of years the current manager has been the portfolio manager for the investment option. Net assets — A measurement of the fund’s size in millions of dollars. Fund expense ratio — The percentage of fund assets paid for operating expenses and management fees. The expense ratio is generally measured against the average expense ratio for the fund category.

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Aiding retirement plan fiduciaries The Quarterly Monitoring Report is a helpful tool for carrying out and documenting the plan sponsor’s fiduciary responsibility. Sponsors can use the report to monitor the current investments in the plan, make prudent decisions about the ongoing inclusion of those investments and substantiate the plan offers diverse and appropriate investment options.

Fund Performance Tables The “Fund Performance Tables” report the rates of return for the investment options offered by the plan. For comparison, the performance tables also include a benchmark index and average returns for the fund category. The performance tables include both recent and long-term data, including the following time periods: • three months (quarter) • year to date • 12 months • three years • five years • 10 years • the entire life of the fund since its inception

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Fund Fact Sheets The report may include optional fact sheets for the investments in the plan. These fact sheets are comprehensive in nature, offering detailed information including, but not limited to: • the return and rank for the fund • the portfolio’s allocation • portfolio data such as expense ratio, and manager name and tenure • top 10 holdings • a risk/reward scatterplot

Definitions of Investment Data The report concludes with a useful reference to help readers understand the various terms used in the Quarterly Monitoring Report. It provides definitions for investment styles, types of capitalization, indexes, risk factors, portfolio statistics and more.

Speak With an Experienced Advisor Representative The Quarterly Monitoring Report is a valuable tool for plan fiduciaries. If you would like to speak to an investment professional in person, our knowledgeable advisor representatives are only a phone call away. They can meet with you to discuss your monitoring report and make recommendations for your plan’s investment lineup. To learn more, contact your local office today by calling 877.805.1127.

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Plan sponsors and participants should carefully consider the investment objectives, risks, charges and expenses of the investment options offered under the retirement plan before investing. The prospectuses for the individual mutual funds and The Standard Group Variable Annuity Contract and each underlying investment option in both the group variable annuity and group annuity contain this and other important information. Prospectuses may be obtained by calling 877.805.1127. Please read the prospectus carefully before investing. Investments are subject to market risk and fluctuate in value.

StanCorp Investment Advisers, Inc. 1100 SW Sixth Avenue Portland OR 97204-1093 877.805.1127 www.standard.com retirement.standard.com rp-14290 (7/08)

This guide is intended only for plan sponsors and partners working with StanCorp Equities, Inc. and Standard Retirement Services, Inc., subsidiaries of StanCorp Financial Group, Inc. It is not intended for presentation to plan participants. StanCorp Equities, Inc., member FINRA/SIPC, distributes group variable annuity and group annuity contracts issued by Standard Insurance Company and may provide other brokerage services. Third-party administrative services are provided by Standard Retirement Services, Inc. Investment advisory services are provided by StanCorp Investment Advisers, Inc., a registered investment advisor. StanCorp Equities, Inc., Standard Insurance Company, Standard Retirement Services, Inc., and StanCorp Investment Advisers, Inc. are subsidiaries of StanCorp Financial Group, Inc., and all are Oregon corporations.