Target Retirement Funds. Investing Made Simple

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1 Target Retirement Funds Investing Made Simple

2 Investing Made Simple Investing for retirement can be a challenge, especially if you re not an expert. And even if you are an experienced investor, you may not have the time or desire to actively manage your investments in the Advocate Retirement Savings Plan. To provide an alternative and simple way for you to invest your retirement savings, Vanguard Target Retirement Funds are available as part of the investment options available to Plan participants. This summary describes how Target Retirement Funds work. It provides useful information that can help you choose how to invest your retirement savings whether in one of these funds or in a combination of investment funds, including one or more of the Plan s other investment options. The goal: Making it easier to make investment choices that reflect your personal investment needs. It s that simple. 2

3 Target Retirement Funds Target Retirement Funds simplify the investment selection process. All you need to do is choose the Target Retirement Fund with the date 2010 through 2060 closest to your anticipated retirement date. The investment mix for each fund is periodically adjusted to reflect typical investment risk and return objectives for people with similar retirement goals. Note: The Vanguard Target Retirement Income Fund is for retired associates who maintain a balance in their Plan account. This fund is intended to provide these retirees with income while preserving the principal investment. ¾¾Vanguard Target Retirement 2060 Fund ¾¾Vanguard Target Retirement 2055 Fund ¾¾Vanguard Target Retirement 2050 Fund ¾¾Vanguard Target Retirement 2045 Fund ¾¾Vanguard Target Retirement 2040 Fund ¾¾Vanguard Target Retirement 2035 Fund ¾¾Vanguard Target Retirement 2030 Fund ¾¾Vanguard Target Retirement 2025 Fund ¾¾Vanguard Target Retirement 2020 Fund ¾¾Vanguard Target Retirement 2015 Fund ¾¾Vanguard Target Retirement 2010 Fund ¾¾Vanguard Target Retirement Income Fund These funds are designed to make it simpler to choose how to invest for your retirement. Whether you re in your 20s or your 70s, there is a Target Retirement Fund for you. These investment funds will continue to be available to participants of the Retirement Savings Plan: ¾¾Vanguard Prime Money Market Fund ¾¾Vanguard Retirement Savings Trust II Fund ¾¾Vanguard Total Bond Market Index Fund ¾¾PIMCO Total Return Fund ¾¾PIMCO Real Return Fund ¾¾Vanguard Balanced Index Fund ¾¾Dodge & Cox Stock Fund ¾¾Principal Large Cap Growth Fund ¾¾Goldman Sachs Mid-Cap Value Fund ¾¾Neuberger Berman Socially Responsive Fund ¾¾Vanguard Institutional Index Fund ¾¾Vanguard Total Stock Market Index Fund ¾¾Dodge & Cox International Stock Fund ¾¾Aston/TAMRO Small Cap Fund-Class I 3

4 One Choice Investing Each Target Retirement Fund invests in up to seven broadly diversified Vanguard funds. The Target Retirement Funds are well-balanced and can include a mix of U.S. stocks, international stocks, U.S. bonds and money market instruments. Like a plane lining up for a smooth landing, the investment risk level under the applicable Target Retirement Fund will gradually descend as you near retirement. If you continue to invest in a Target Retirement Fund, you may never have to adjust your investment mix. Investment professionals adjust the Target Retirement Fund investment mix for you according to a predetermined schedule. And that means less work and worry for you. Target Retirement Fund Years to Retirement Years after Retirement This chart illustrates how the asset allocations for the Target Retirement Funds will change over time. For younger employees, their corresponding Target Retirement Fund will invest more heavily in equities, including exposure to international and emerging markets. As the target retirement year approaches, each fund will become more conservative, eventually mirroring the asset allocation of Vanguard Target Retirement Income Fund. This concept applies to all Vanguard Target Retirement Funds. Two Ways to Diversify Investing your retirement savings in a diverse mix of investments is an important part of a longterm strategy. With the addition of the Target Retirement Funds, the Plan will offer two different ways to achieve a diversified portfolio by choosing to invest in a Target Retirement Fund, or by choosing a combination of investments from the Plan s selection of individual investment funds. 4

5 Make One Choice Investment Approach #1: Target Retirement Funds These one-choice funds can be an easy approach to investing for retirement. Target Retirement Funds are premixed and include underlying funds from various investment styles. Simply choose the fund with the date nearest the year in which you expect to retire. Fund Name Investment Mix* Risk Level 13% bonds 87% stocks 1% cash 20% bonds 79% stocks 2% cash 26% bonds 72% stocks 1% cash 35% bonds 64% stocks 1% cash 43% bonds 56% stocks 2% cash 53% bonds 45% stocks *Approximate allocation targets for each Target Retirement Fund as of 2/29/12. Allocation for date-specific funds will shift (from stocks to bonds and short-term reserves) over time based on an assumed age retirement of 65. 5

6 Or Pick and Choose Investment Approach #2: Mix of Individual Investment Funds The individual investment funds offered through the Plan offer the opportunity to build a welldiversified investment portfolio by choosing a combination of funds that meets your personal investment objectives. These funds represent a variety of investment types and styles. Keep in mind that while the pick & choose approach allows you to customize your own portfolio, you may need to rebalance your investment choices over time to keep pace with your personal investment goals as they change over time. The diagram displays the various individual investment funds across the spectrum of potential risk and return based on each fund s investment objective. The diagram is based on an analysis by Advocate Health Care, which is solely responsible for the content. Dodge & Cox International Stock Fund Aston/TAMRO Small Cap Fund-Class I Goldman Sachs Mid-Cap Value Fund Principal Large Cap Growth Fund Vanguard Total Stock Market Index Fund Vanguard Institutional Index Fund Neuberger Berman Socially Responsive Fund Dodge & Cox Stock Fund Vanguard Balanced Index Fund All Vanguard Target Retirement Funds PIMCO Real Return Fund PIMCO Total Return Fund Vanguard Total Bond Market Index Fund Vanguard Retirement Savings Trust II Fund Vanguard Prime Money Market Fund 6

7 Getting Started Getting Started If you decide that the Target Retirement Fund approach is right for you, here s what you need to do: ¾¾Visit Advocate Benefits at then once your reach the Retirement section you can... ¾¾Move your existing balances into the date-specific Target Retirement Fund closest to the year in which you expect to retire, and/or ¾¾Direct your future contributions into the Target Retirement Fund you have chosen. For More Information For more information about Vanguard Target Retirement Funds, visit the Vanguard web-site at including investment objectives, risks, charges and expenses. Call The Vanguard Group at or visit to obtain a prospectus. The prospectus contains this and other important information about the fund. Read and consider the prospectus information carefully before you invest. For information on all other funds, contact the investment providers directly. For additional Plan questions or information about the individual investment options available under the Advocate Retirement Savings Plan, go online anytime at or call Advocate Benefits Service Center at , then press 1. You can speak with a customer service representative 8 am to 6 pm Central Time, Monday through Friday. 7

8 More to Know It s important to evaluate your options before you make an investment choice. When choosing your investments, keep in mind: ¾¾Risks associated with the investment option can vary significantly. For a more complete description of risks associated with an investment option, please read the prospectus or other appropriate document before making your decision. ¾¾An investment option s value will vary over time, so at any given time you may have an investment gain or loss. ¾¾Generally, international investments especially those in emerging markets involve greater risks and may offer greater potential returns than U.S. investments. These risks include political and economic uncertainties of foreign countries, as well as the risk of currency fluctuations. ¾¾Investments in smaller companies may involve greater risks than those in larger, more well-known companies. ¾¾Neither diversification nor asset allocation ensures a profit or guarantee against a loss. The investment funds offered through the Retirement Savings Plan have different risk and return characteristics that you should carefully consider before making your investment choices. How you choose to invest your Retirement Savings Plan account is an important decision which you should make carefully. It is your responsibility to thoroughly review all the information provided to you by a fund s sponsor prior to making your investment choices. Advocate Health Care cannot advise you concerning how to invest, nor does it take responsibility for the performance of any investment fund. Advocate Health Care reserves the right to change fund managers from time to time. 8 5/12 MC 0851