DEVELOPING YOUR INVESTMENT STRATEGY

Transcription

1 DEVELOPING YOUR INVESTMENT STRATEGY Tier I: Date s / Tier II: Index s / Tier III: Active Management The chart below can help you to choose funds based on how involved you d like to be in your investments, your personal tolerance for risk (see the bottom of this page for an overview of the riskreward spectrum), and your time horizon (in other words, how long before you plan to retire). You ll be able to make two decisions: which investment tier (or combination of tiers) matches your preferred level of involvement, and which of the individual investment option(s) is best-suited to your situation. Low Determine Your Risk Tolerance Risk Spectrum High Determine How Involved You Would Like To Be Your Involvement Less Participant Involvement More Participant Involvement Data Index Active Retirement Income 2000 Total Bond Market Index Prime Money Market Intermediate Bond 2010 Large Cap Value 2020 S&P 500 Index Large Cap Growth 2030 Mid-Cap Blend Developed Markets Index Small Cap International MAKE INFORMED DECISIONS Understand the Three Investment Tiers The RSIP helps you save for retirement by giving you a mixture of investment tracks. Each tier has a variety of options that span the risk-reward spectrum, as shown below. This allows you to select the option or options that will help you meet your savings goals. Lower Risk Potentially Lower Return Money Market Bonds Stocks Higher Risk Potentially Higher Return

2 DESIGNATED DEFAULT FUND: TARGET DATE PORTFOLIOS If you do not make an investment election, your contributions will be invested in the appropriate Date based on your date of birth and an assumed retirement age of 65. (See the chart below.) Default Table Date of Birth Range Retirement Date Range Date portfolios 12/31/1930 and earlier 12/31/1995 and earlier Retirement Income 1/1/1931 to 12/31/1940 1/1/ /31/ * 1/1/ /31/1950 1/1/ /31/ /1/ /31/1960 1/1/ /31/ /1/ /31/1970 1/1/ /31/ /1/ /31/1980 1/1/ /31/ /1/1981 and later 1/1/2046 and later 2050 * Effective February 2015, the 2000 will have an asset allocation identical to the Retirement Income. At that time, the 2000 will merge into the Retirement and all assets invested in the 2000 will be automatically transferred to the Retirement Income. Overview All of the Date s are asset allocation investment options. They invest in a pool of companies, with a mix of stocks, bonds and cash. They become more conservatively allocated over time as you move closer to your target retirement date. After reaching the target retirement date, these s continue to be managed more conservatively for ten to fifteen more years until their asset mix is approximately the same as the Retirement Income, which is designed for those already in retirement. The goal of the Retirement income is to maintain high current income capital; capital appreciation is a secondary objective. The Date s are subject to the volatility of the financial markets in the U.S. and abroad and may be subject to the additional risks associated with investing in high-yield, small-cap and foreign. Principal is not guaranteed at any time and it is possible to lose money at any time, including near and during your retirement. You can log on to the secure enrollment portal of My TE Benefits Connection at www. TEBenefits-US.com, 24 hours a day, seven days a week, for detailed RSIP investment option descriptions, planning tools, calculators, educational resources and more. You can call the TE Benefits Center at , 8 a.m. to 8 p.m. Eastern Time,

3 REVIEWING YOUR RSIP INVESTMENT OPTIONS Tier I: Date s Retirement Income What it invests in:* - 72% Fixed Income and Cash - 28% stocks Who may want to invest - Age 80 and older - Someone who prefers to leave decisions to professional money managers ** % Fixed Income and Cash - 30% stocks - 54% Fixed Income and Cash - 46% stocks - 38% Fixed Income and Cash - 62% stocks - 23% Fixed Income and Cash - 77% stocks - 10% Fixed Income and Cash - 90% stocks - 10% Fixed Income and Cash - 90% stocks - Someone who retired around the year 2000 or ages 70 to 79 - Someone who retired around the year 2010 or ages 60 to 69 - Someone who retired around the year 2020 or ages 50 to 59 - Someone who plans to retire around the year 2030 or ages 40 to 49 - Someone who plans to retire around the year 2040 or ages 30 to 39 - Someone who plans to retire around the year 2050 or under age 30 * Asset allocation information is approximate as of August 31, ** Effective February 2015, the 2000 will have an asset allocation identical to the Retirement Income. At that time, the 2000 will merge into the Retirement and all assets invested in the 2000 will be automatically transferred to the Retirement Income. You can visit My TE Benefits Connection at 24 hours a day, seven days a week, for detailed RSIP investment option descriptions, planning tools, calculators, educational resources and more. You can call the TE Benefits Center at , 8 a.m. to 8 p.m. Eastern Time,

4 Tier II: Index s What it is: Goal What it invests in: Who may want to invest: Total Bond Market Index Institutional Shares An income Seeks high level of interest income by tracking performance of a broad, marketweighted index - A large sampling of that matches key characteristics of the Barclays Capital Aggregate Bond Index - A higher percentage than the index in shortterm, investment grade corporate bonds and a lower percentage in short-term Treasury - Someone seeking a high level of income - Someone seeking a low-cost broadly diversified, fixed-income investment to balance the risks of a portfolio containing stocks S&P 500 Index Advantage Class An index Investment results that correspond to the total return performance of common stocks publicly traded in the U.S. - Normally invests at least 80% of its assets in common stocks included in the S&P 500 Index - Someone willing to ride out stock market fluctuations for potentially high long-run return pursue long-term growth Developed Markets Index Institutional Shares A money growth that invests overseas Seeks to track the performance of MSCI Europe, Australasia, Far East Index (EAFE Index) - The fund allocates substantially all of its assets between the European Stock Index and the Pacific Stock Index - Allocation is based on the market capitalization of European and Pacific stocks in the MSCI EAFE index complement the performance of U.S. investments with that of investments overseas - Someone comfortable with the high investment risks and potential rewards involved in investing overseas You can visit My TE Benefits Connection at 24 hours a day, seven days a week, for detailed RSIP investment option descriptions, planning tools, calculators, educational resources and more. You can call the TE Benefits Center at , 8 a.m. to 8 p.m. Eastern Time,

5 REVIEWING YOUR RSIP INVESTMENT OPTIONS Tier III: Active Management What it is: Goal What it invests in: Who may want to invest: Prime Money Market - Institutional Shares A money market - Seeks to provide current income while maintaining a stable share price of $ High-quality, shortterm money market instruments, including certificates of deposit, banker s acceptances, commercial paper and other money market - More than 25% of assets in issued by companies in the financial services industry - Investors seeking interest income and a stable share price - Investors seeking a parking place for cash while awaiting opportunities for longterm investments Intermediate Bond A bond investment option - Provide maximum total return consistent with prudent investment management and liquidity needs - Investing to obtain an average duration of 2.5 to 7 years - Primarily U.S. government obligation corporate bonds, mortgage-backed, asset-backed, other debt and money market instruments - May invest up to 15% of total assets in non-u.s. dollar-denominated and emerging market debt - May invest in belowinvestment-grade - Investors desiring broad fixed income exposure that are willing to accept some risk in exchange for potentially higher long-term return Large Cap Value A growth and income - Provide longterm capital appreciation and income - Primarily large- and mid-capitalization companies whose stocks are considered by the fund s advisors to be undervalued - Stocks with belowaverage price-toearnings ratios, aboveaverage yields and solid relative-return potential - Someone investing for the long term (5+ years) - Someone willing to accept possibly sharp swings in the value of his or her investment

6 What it is: Goal What it invests in: Who may want to invest: Large Cap Growth A domestic equity mutual fund - Provide capital appreciation - Primarily in common stocks - Companies that the manager believes have above-average growth potential - May invest in domestic and foreign issuers - Someone who wants the potential for long-term growth of capital diversify a conservative portfolio Mid-Cap Blend A portfolio of midcapitalization equity - Provide above benchmark returns and moderate risk - Primarily of US companies - Conducts rigorous fundamental research to identify companies with improving returns on invested capital be invested in the stock market for its long-term growth potential Small Cap A domestic equity investment option - Maximum longterm total return, consistent with the type of risk - Primarily common stocks of domestic companies that are smaller or less established in terms of revenues and have market capitalizations that are less than $2.5 billion at the time of initial purchase - Someone who is willing to accept the potentially higher risk in exchange for potentially higher returns International An investment option that invests directly in with an international equity strategy - Provide returns in excess of the MSCI All Country World ex U.S. Index (ACWI ex U.S.), Net (Unhedged) in USD - Primarily listed, including emerging markets - Forward currency contracts may be used to manage the portfolio s currency exposure - Someone who wants the potential for returns in excess of the MSCI All Country World ex U.S. Index, Net (Unhedged and in USD) over the long-term horizon You can visit My TE Benefits Connection at 24 hours a day, seven days a week, for detailed RSIP investment option descriptions, planning tools, calculators, educational resources and more. You can call the TE Benefits Center at , 8 a.m. to 8 p.m. Eastern Time,

7 FINANCIAL PLANNER BENEFIT TE provides you with a free financial planning benefit through Ernst & Young. With the EY Financial Planner Line, you can get financial planning advice on a multitude of topics, including retirement planning, debt management, investment planning, college savings and estate or tax planning all at no cost to you. Get started today by calling EYTE (3983)! Disclaimer: The TE Retirement Savings and Investment Plan (RSIP) is intended to be a participant-directed plan as described in Section 404c of ERISA, which means that fiduciaries of the Plan are ordinarily relieved of liability for any losses that are the direct and necessary result of investment instructions given by a participant or beneficiary. Unless otherwise noted, transaction requests confirmed after the close of the market, normally 4 p.m. ET, or on weekends or holidays, will receive the next available closing prices. The investment options available through the Plan reserve the right to modify or withdraw the exchange privilege. Be sure you understand the Plan guidelines and impact of taking a loan before initiating a loan from your account. Please be sure you understand the tax consequences of any withdrawal from the Plan. While we have made every effort to make this brochure as accurate as possible, if there are any inconsistencies between the brochure and the RSIP Plan Document, the terms of the RSIP Document will govern.