Target Date Funds. [CODE] [Expiration Date]

Transcription

1 Target Date Funds Investments and services offered through Morgan Stanley Smith Barney LLC, and accounts carried by Morgan Stanley & Co. Incorporated; members SIPC Morgan Stanley Smith Barney [CODE] [Expiration Date]

2 Why Are We Here Today? Define target date funds Examine how target date funds work Review the benefits of target date funds, as well as relevant considerations Examine factors that should be taken into consideration before investing in a target date fund 2

3 What Is a Target Date Fund? Grow and then preserve assets for a specific investment goal Asset allocation adjusted over time Move from focus on growth to focus on capital preservation Portfolio comprised of other mutual funds and/or exchange traded funds (ETFs)

4 The Target Date The investor selects a fund with a target date closest to his or her anticipated date of retirement. Target Date Expected Retirement Date

5 Risk and Return The objective is to optimize portfolio risk and return in order to achieve the fund s investment objective at the target date. Risk Return 5

6 Asset Allocation 6

7 The Glide Path Higher Risk and Return 2015 Lower

8 Example More Growth-Oriented More Income-Oriented Now: More growth oriented with a heavy weighting to equities Over Time: Gradually shifts to a more conservative allocation as the target date draws near Target Date: More conservative and income-oriented Stocks Bonds Cash Equivalents 8

9 Benefits Simplicity Single Investment Asset Allocation Diversification Automatic Rebalancing 9

10 Considerations No Guarantees Investment Risks Costs Use in the Portfolio Target Date Returns 10

11 Evaluating and Comparing Funds Risk/Return Profile Underlying Investments Fund Management After the Target Date 11

12 Risk/Return Profile Conservative Aggressive Catch-Up 25 5 XYZ 2025 Fund * 5 35 Asset Protection ABC 2025 Fund * Stocks Bonds Cash Equivalent * Hypothetical Funds 12

13 Underlying Investments ABC 2040 Fund * XYZ 2040 Fund * Equities Component ABC Large Cap Growth Fund 35% ABC Large Cap Value Fund 25% ABC Small Cap Growth Fund 10% ABC International 10% Total 80% Equities Component XYZ Large Cap Growth Fund 30% XYZ Large Cap Value Fund 15% XYZ Small Cap Growth Fund 20% XYZ International 15% Total 80% * Hypothetical Funds 13

14 Fund Management Target Date Fund Management Index vs. Actively Managed Underlying Funds 14

15 After the Target Date Convert to an income fund Gradually transition to an income fund over a period of several years Maintain an asset allocated portfolio including an allocation to equities 15

16 Comparing Performance Inadequacy of traditional benchmarks Long-term investment strategy Performance relative to other target date funds Performance of the underlying funds 16

17 The Prospectus Investment objective and strategy Underlying funds Risks Fees and expenses Performance information 17

18 Is a Target Date Fund Right for Me? Do I have the knowledge and/or time to implement and monitor the allocation of my investment portfolio? Am I comfortable with a target date fund as a single investment solution? Am I comfortable leaving control of investment decisions up to the fund manager? Do I have a good idea of when I would like to or be able to retire? Is the risk/return profile of the fund consistent with my investment objective and risk tolerance? Am I comfortable with the investment philosophy and management style of the fund manager? Am I comfortable with the underlying funds in which the fund invests? 18

19 Your Financial Advisor Team at Morgan Stanley Smith Barney Y:\Other\Get the Most Out of Your IRA ( ) 8/26/2010 Our Financial Advisors can provide: Access to intellectual strength and global resources of Morgan Stanley Smith Barney Financial solutions that address your specific needs and goals Name [First Name] [Last Name] Title Phone: Fax: Morgan Stanley Smith Barney, Morgan Stanley & Co. Incorporated and Morgan Stanley Smith Barney s Financial Advisors do not provide tax or legal advice, are not fiduciaries (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein, and this material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are urged to consult their tax or legal advisor before establishing a retirement plan or to understand the tax, ERISA and related consequences of any investments made under such plan. 19