Start the New Year Off Right TAKE THE TIME TO REVIEW YOUR FINANCES AND MAKE PLANS FOR THE COMING MONTHS.

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1 WINTER Start the New Year Off Right TAKE THE TIME TO REVIEW YOUR FINANCES AND MAKE PLANS FOR THE COMING MONTHS. ALSO IN THIS ISSUE: What Stock Funds Can Do for You Find out how stock funds can impact your investment portfolio at every life stage from early career to retirement. The Benefits of Dollar-Cost Averaging Stocks are unpredictable, but you can take steps to help ensure that your portfolio performs well over time. JANUARY SITS AT THE INTERSECTION OF closing out one financial year and preparing for a new one. It s the perfect time to analyze the past year s results and make a plan for the year ahead. Here s what to review and how to use that information to build your plan. 1. Take a look at your retirement plan. Review your retirement savings to assess whether you re on track to save enough for your eventual retirement. Our online calculator Continued on page 2 Remain Focused on Long-Term Goals Don't lose track of your objectives. Keep market volatility in perspective and invest over the long term.

2 Continued from page 1 (see calculatemyretirement.com) can help you identify if the contributions you made in 2015 are enough or whether you should increase your savings target for the coming year. Increasing your contributions to your workplace retirement plan, IRA or both by just 1 or 2 percent can potentially have a big impact on your nest egg over time and may take only a small bite from your paycheck. That s because these accounts take advantage of taxdeferred compounding, which allows every dollar you contribute to grow and taxes to be postponed until you start taking withdrawals in retirement. For the 2016 tax year, the maximum contribution limits are $18,000 for a 401(k) and $5,500 for an IRA. If you re 50 or older, you can make additional annual catch-up contributions of $6,000 in a 401(k) and $1,000 in an IRA. 2. Make sure your withholding is on target. Large tax refunds make for a nice windfall, but they also indicate that you may be loaning Uncle Sam too much money during the year. Review your withholdings and adjust accordingly. Here s how: First review your tax liability from 2014 and compare it to your year-to-date withholdings for 2015, which are shown on your pay stub. If your withholdings for 2015 substantially exceed your tax liability for 2014, and your income and tax circumstances haven t changed dramatically, you can adjust the withholding amount on your W-4, which is on file with your employer. 3. Review your household spending and establish a budget. Now is the time to set your spending priorities for the next 12 months. Reviewing your household spending for the past year will give you important insights into where your money is going and help you plan for the coming year. This task is made easier if your credit card company or bank offers annual spending breakdowns by categories, such as food, clothing, automotive, household, insurance and medical; although you can also track these on your own. In addition to understanding where your money went in 2015, you will also create a framework for a 2016 spending plan. Such a plan can decrease stress levels by allowing for fewer financial surprises. Setting aside funds for unexpected medical bills or car repairs, for example, reduces the risk that a sudden emergency room visit or a broken fan belt will send you into a panic. On the flip side, you can also plan for leisure time by building vacations, entertainment and other fun activities into your plan. A 10 percent tax penalty may apply for withdrawals from tax-qualified products before age 59½. "A 2016 SPENDING PLAN CAN DECREASE STRESS LEVELS BY ALLOWING FOR FEWER FINANCIAL SURPRISES." 4. Donate to charity. Gather receipts and records for your giving from the past year to see how much you donated and where your contributions went. Did your donations reflect your priorities? If not, make a plan for 2016 that is more in keeping with your goals and values. A charitable giving plan brings with it an added bonus: Every dollar you give to qualified charitable organizations may reduce your taxable income, effectively lowering your tax bill. As a result, you may find that you can increase your giving without jeopardizing your carefully laid financial goals. 2

3 THE BENEFITS OF DOLLAR-COST AVERAGING Stocks are unpredictable, but you can TAKE STEPS TO HELP ENSURE THAT YOUR INVESTMENTS PERFORM WELL OVER TIME. WHAT IS DOLLAR-COST AVERAGING? When you invest SMALLER AMOUNTS regularly 1 2 WHAT IS LUMP-SUM INVESTING? When you invest ONE SUM all at once 1 JANUARY JAN 1 X X WHY USE DOLLAR-COST AVERAGING? With dollar-cost averaging, you make investments on a regular basis, so... When stocks rise: You can feel confident you ve been investing money in assets that are likely now gaining in value. When stocks fall: You can purchase assets at a lower price and help strengthen your returns when the market rebounds. WHO SHOULD USE DOLLAR-COST AVERAGING? Anyone, but well-suited to those who regularly contribute to workplace or personal retirement accounts DOES IT REALLY WORK? Consider Peter and Kelly s strategies over 20 months: Invested $1,000 each month for 20 months starting in January 2014 At the end of 20 months, Peter netted more shares at cheaper prices Purchased 1,783 shares at an average price of $11.22 per share NUMBER OF SHARES ,000 1,200 1,400 1,600 1,800 PETER dollar-cost averaging Didn t stop investing when stocks were down PETER (DOLLAR-COST AVERAGING) 1,783 $ Invested $20,000 in January 2014 Purchased 1,429 shares at $14 per share KELLY (LUMP-SUM INVESTING) 1,429 $14.00 KELLY lump-sum investing Stock price moved up and down, from $6.25 a share to $18.20 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 AVERAGE PRICE PER SHARE Dollar-cost averaging does not assure a profit or protect against loss. Call your State Farm agent to explore if this investment strategy could work for you. 3

4 WHAT STOCK FUNDS CAN DO FOR YOU FIND OUT HOW STOCK FUNDS CAN IMPACT YOUR INVESTMENT PORTFOLIO AT EVERY LIFE STAGE FROM EARLY CAREER TO RETIREMENT. GROWTH IS A TOP PRIORITY FOR MOST. And over the long term, equities (or stocks) can be a particularly useful tool for pursuing that goal. Since 1926, stocks in the S&P 500 index have experienced gains in every 20-year period. In fact, for the 20 years ending in 2014, stocks posted a compound annual gain of 9.85 percent.1 So why not just put all your savings into stocks? While that may seem like a smart move based on those long-term returns, the reality is that in the short term (less than 10 years, for instance), stock prices rise and fall, sometimes dramatically. For most investors, a better approach is to make equities one part of a diversified portfolio that also includes less volatile investments such as high quality bonds, CDs and money market funds. These more conservative investments can smooth out ups and downs of the stock market. Moreover, in a mixed portfolio, you can adjust the percentage of each type of investment as your needs and time frame change. The benefits of mutual funds For the stock portion of your portfolio, you can choose one of two ways to invest: Buying shares of individual companies. Make sure you research each company s finances and select a wide variety of stocks from various industries and parts of the world to properly diversify. Investing in a basket of stocks through a mutual fund or exchange-traded fund. These funds hold shares of dozens, hundreds or even thousands of companies. Investing in mutual funds or exchange-traded funds is like hiring a professional to do all the legwork for you. That is especially important for funds that are actively managed. With an actively managed fund, a portfolio manager and a team of experts handle all the research, actively choosing which stocks to buy and which to sell and when to make those transactions. But even if you select a passively managed fund, which is designed to mirror a particular stock index such as the S&P 500, you ll benefit from the expertise of the professionals behind the fund. HOW TO CONTACT US: VISIT YOUR REGISTERED STATE FARM AGENT SPEAK TO A REPRESENTATIVE FROM OUR MUTUAL FUNDS RESPONSE CENTER: Call In (for State Farm Associates call ) Mon-Fri 8AM-6PM CT. Or use our interactive voice response system 24 hours a day, 7 days a week. Click In Log in to your online account to either chat with a representative or send us an . How to use stock funds in your portfolio Generally speaking, a stock fund may be appropriate if you: Seek long-term growth that keeps up with, or exceeds, inflation Can tolerate significant fluctuations in the value of your investment Are seeking to balance potential risks and rewards in your portfolio Are investing for retirement or other goals that are many years in the future When you have decades to reach your goal for example, you re in your 20s or 30s and you re saving for retirement it may make sense to hold the majority of your savings in equities since your goal is far enough away to likely weather any short-term volatility. Plus, the stock fund s long-term growth potential can help beat inflation over time. As you get closer to your retirement goal say you anticipate retiring in seven or eight years you may want to reduce the amount that you hold in stock funds and increase the proportion of conservative options, such as bonds or bond funds. But you probably shouldn t remove all equity investments. Remember, your retirement may last three decades or more, and you ll need continued growth potential to increase the likelihood that your nest egg will last as long as you do. To learn more about how stock funds can help you work toward your long-term goals, contact a registered State Farm agent today. Or use the State Farm Mutual Funds Selection Tool at statefarm.com/finances/mutual-funds. LET TECHNOLOGY WORK FOR YOU: Download the Pocket Agent app for your smartphone or tablet. Manage mutual fund accounts. View transaction history. View pending transactions. VISIT STATEFARM.COM TO: Sign up for electronic delivery. View your personal portfolio. Obtain current values. View transaction history. View and print statements. Purchase, exchange or redeem shares. Investing involves risk, including potential for loss. Before investing, consider the funds investment objectives, risks, charges and expenses. Contact State Farm VP Management Corp ( ) for a prospectus or summary prospectus containing this and other information. Read it carefully. AP2015/09/1664. Not FDIC Insured No Bank Guarantee May Lose Value 1.Ibbotson SBBI Classic Yearbook 2015 Diversification does not assure a profit or protect against loss. Bonds are subject to interest rate risk and may decline in value due to an increase in interest rates. 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. 4 An electronic version of the Mutual Funds Investor newsletter can be accessed on statefarm.com by searching for Investor Newsletter.

5 STATE FARM MARKET RECAP As of October 31, 2015 EQUITIES RECAP Global equity markets rallied in October, after the U.S. Federal Reserve's EQUITIES MARKET PERFORMANCE Total Returns for Periods Ended October 31, 2015 U.S. STOCKS A fter a challenging third quarter, U.S. stocks rebounded strongly in October PERFORMANCE OF S&P 500 INDEX Total Returns for Periods Ended October 31, 2015 GLOBAL EQUITIES Global equity markets rallied in October, largely due to signs of stabilization PERFORMANCE OF MSCI EAFE INDEX Total Returns for Periods Ended October 31, 2015 decision to delay raising interest rates and global central bank stimulus helped offset ongoing concerns about a slowing world economy. For the month, the Standard & Poor's 500 Index, a benchmark for the U.S. equity market, recorded its best month of the year gaining 8.4%, and moved its year-to-date total return back into positive territory. In the U.S., mid- and small-cap stocks also recorded strong gains for the month, with the Russell Midcap Index gaining 6.2% and the Russell 2000 Index posting a total return of 5.6% for the month. Outside the U.S., international markets moved sharply higher for the month, as China's economic outlook stabilized and the country's central bank cut borrowing rates. For the month, the MSCI EAFE Index, representing international developed markets (excluding the U.S.) gained 7.8%, in U.S. dollar terms. Meanwhile, international emerging markets, as measured by the MSCI EM Index (not shown), gained 7.1% for the month. by posting the best monthly performance in four years. In fact, according to S&P Capital, only 13 months since 1980 have been better, including three Octobers. The 8.4% monthly gain of the S&P 500 Index took the index from a year-to-date loss of over 5% at month-end September to a positive 2.7% total return at month-end October. L ooking at the longer-1- and 5-year time periods ending October 31, 2015, each of the major U.S. stock indices have posted positive total returns. For the 1-year period, large-cap stocks led the major stock indices posting a total return of 5.2%, followed by mid- and small-cap stocks posting total returns of 2.8% and 0.3%, respectively. In terms of sector performance, all ten of the S&P sectors advanced for the month, with the top performers Materials, Energy, and Information Technology, posting total returns of 13.5%, 11.4%, and 10.8%, respectively. Consumer Discretionary gained 9.1% for the month, as consumers were helped by lower gas prices and therefore able to spend more on discretionary items. The interest rate-sensitive Utilities sector lagged the overall market, adding 1.1%. Year-to-date through October, five of the ten S&P sectors posted positive total returns led by Consumer Discretionary, Information Technology and Health Care, respectively. in China's economy and signals from central banks around the world that monetary policy will remain broadly accommodative. For the month, the MSCI EAFE Index, representing international developed markets (excluding the U.S.) gained 7.8% and moved its year-to-date total return into positive territory, up 2.1%. M eanwhile, emerging markets advanced for the month helped by the performance of Chinese equities, which have staged a strong rally since plummeting during the summer. China was one of the world's best performing markets in October, posting gains of more than 9%. For the month, the MSCI EM Index (not shown) gained 7.1% and raised its year-to-date total return to -9.5%. A fter sustained weakness in global markets in the third quarter, the Japanese equity market moved sharply higher in October with the MSCI Japan Index gaining 10.1%, in U.S. dollar terms. Year-to-date through October, the Japanese equity market is one of the leading global markets, posting a total return of 10.3%, in U.S. dollar terms. FIXED INCOME RECAP In the U.S. fixed income market, bonds held on to modest gains in October as investors reacted to the Federal Reserve not raising interest rates in September as many had anticipated. For the month, the Barclays U.S. Aggregate Bond Index, a broad measure for the U.S. fixed income market, posted a 0.02% total return. Over the longer 1- and 5-year time periods, the Barclays U.S. Aggregate Bond Index recorded annualized total returns of 2.0% and 3.0%, respectively. U.S. municipal bonds advanced for the fourth consecutive month in October, as investor demand outpaced supply. For the month, the Barclays Municipal Bond Index gained 0.4%, and advanced its year-to-date total return to 2.2%. Over the longer 1- and 5-year time periods, U.S. municipal bonds recorded positive annualized total returns of 2.9% and 4.3%, respectively. The U.S. Treasury yield curve shifted higher for the month, after the Federal Reserve held off on a rate increase, leading investors to sell U.S. government debt in favor of relatively riskier assets. At month-end October, the yield on the benchmark 10-year Treasury note closed at 2.16% up ten basis points (a basis point is 1/100th of 1%) from 2.06% at month-end September. Meanwhile, the yield on the 30-year Treasury Bond closed the month at 2.93%, up from 2.87% at month-end September. U.S. BOND MARKET PERFORMANCE Total Returns for Periods Ended October 31, 2015 U.S. TREASURY YIELD CURVES 5

6 MARKET COMMENTARY Remain Focused on Long-term Goals In some ways investing for retirement is similar to the work you do each day. You re required to concentrate on specific goals and in the process you may become distracted by momentary interruptions that can cause you to shift focus. This also holds true when investing for long-term goals such as retirement. Spurts of short-term market volatility can cause you to make impulsive reactions and lose focus on your long-term objectives. After six-plus years of relative calm, the U.S. stock market experienced its first market correction when the Standard & Poor s 500 Index, a benchmark for U.S. stocks, declined more than -10% in a relative short period of time. In fact, according to S&P Capital, the -12.4% decline from the May 21st highs through August 25th ended the third longest streak without such a correction in fifty years. Typically, "corrections" are defined as a decline in stock prices of -10% or more, while "bear" markets are defined as declines of -20% or more. The chart shows that since the market low of March 2009 there have been four market corrections (represented by the green bars), or declines of -10% or more in the S&P 500 Index during the past six-plus years. In 2010 (-15%, lasting 46 days), 2011 (-19%, lasting 106 days), 2012 (-10.0%, lasting 42 days), and most recently in 2015 (-12%, lasting 67 days). That means that since the start of the bull market in 2009, there have been four relief rallies that more than offset the corrections along the way, with the S&P 500 Index gaining almost +185% for the period. The performance of the stock market during the latter half of 2015 is a good reminder that the market goes through cycles and will not always power through to new highs each year. Even during bull market cycles, like the one we ve experienced over the past six-plus years, there can be days and weeks when the market is volatile to the downside. How the stock market performs in 2016 remains to be seen, but the important takeaway is to remember that stock market corrections of -10% or more in any given year is a fairly normal event. With this in mind, investors should keep market volatility in perspective, invest over the long-term, and remain focused on their longer-term goals. Your registered State Farm agent is there to help you with these and other financial or insurance needs you may have. Securities, insurance and annuity products are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Diversification, Automatic Investment Plans and Asset Allocation do not assure a profit or protect against loss. Investing involves risk, including potential for loss. Current and future portfolio holdings are also subject to risk. Bonds are subject to interest rate risk and may decline in value due to an increase in interest rates. The stocks of small companies are more volatile than the stocks of larger, more established companies. Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations. Emerging markets involve greater risks than U.S. investments due to lower trading volume, political and economic instability, and other governmental limitations on foreign investment policy. The Dow Jones Industrial Average is a price-weighted average of 30 U.S. companies traded on the New York Stock Exchange (NYSE) and NASDAQ. The S&P 500 Index tracks the common stock performance of 500 large U.S. companies. Standard & Poor's, S&P, and S&P 500 are registered trademarks of Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill Companies. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. The Russell 2000 Index tracks the common stock performance of the 2,000 smallest U.S. companies in the Russell 3000 Index. Russell Investments is the owner of trademarks, service marks, and copy rights related to its respective indexes. The Morgan Stanley Capital International Europe, Australasia and Far East Free (MSCI EAFE Free) Index currently measures the performance of stock markets of Europe, Australia, New Zealand, and the Far East. The NASDAQ Composite is an unmanaged market capitalization weighted index that is designed to represent the performance of the National Market System. The MSCI Emerging Markets Index is a capitalization-weighted index of stocks from 26 emerging markets that only includes issues that may be traded by foreign investors. The Barclays U.S. Corporate High Yield Bond Index is a market value-weighted index which covers the U.S. non-investment grade fixed-rate debt market. The Barclays 1-5 Year U.S. Treasury Index measures the performance of short-term U.S. Treasury Securities maturing within one to five years. The Barclays U.S. Aggregate Bond Index represents debt securities in the U.S. investment grade fixed-rate bond market. The Barclays Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market. Neither State Farm nor its agents provide investment, tax, or legal advice. State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products. 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. This recap has been prepared by State Farm VP Management Corp. for informational purposes. The information contained herein has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. Any opinions discussed herein reflect our judgment as of the date of publication and are subject to change without notice. This material should not be considered a recommendation to purchase or sell any security. Before Investing, consider the funds' investment objectives, risks, charges and expenses. Contact VP Management Corp ( ) for a prospectus or summary prospectus containing this and other information. Read it carefully. State Farm VP Management Corp. 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