MaximizeYour Impact. MorganStanleyGlobal Impact FundingTrust (GIFT): Impact Pools. CRC (3/2015) Expiration (3/2016)

Transcription

1 MaximizeYour Impact MorganStanleyGlobal Impact FundingTrust (GIFT): Impact Pools CRC (3/2015) Expiration (3/2016)

2 Global Impact Funding Trust (GIFT) Introduction The Morgan Stanley Global Impact Funding Trust (GIFT) is a donor-advised fund and suite of associated philanthropic services. Contributions to GIFT are invested in Consulting Group's Select UMA program, a unified managed account platform that combines separately managed accounts, mutual funds and exchange-traded funds in a diversified, cost-effective portfolio. There are currently six programs (pools) available including two pools that aim to generate market-rate financial returns while demonstrating positive environmental and/or social impact that are the focus of this presentation. KEY GIFT FEATURES: Asset allocation strategies developed by the Morgan Stanley Wealth Management Global Investment Committee Disciplined portfolio construction provided by Consulting Group across six pools including two Impact pools Investment products in Select UMA researched by Consulting Group s Global Investment Manager Analysis Professionally managed investment strategies featuring broad diversification and automatic rebalancing 2 INVESTING WITH IMPACT

3 What Is Investing with Impact? Morgan Stanley defines Investing with Impact as an approach that aims to generate marketrate financial returns while demonstrating positive environmental and/or social impact. Financial Goals Financial performance driven by economic fundamentals Investing with Impact Impact Goals Positive social and/or environmental outcomes driven by values and mission Delivering innovative solutions for our clients that align their personal values with their financial goals is an important focus for Morgan Stanley, and I believe we are uniquely suited to do this. James Gorman Morgan Stanley Chairman and CEO 3 INVESTING WITH IMPACT

4 Evolving Approach to Investing with Impact SOCIALLY RESPONSIBLE INVESTING & VALUES ALIGNMENT 1970s on ESG INTEGRATION 1990s on IMPACT INVESTING 2000s on Investing with Impact Investing with Impact incorporates a variety of terms and investment approaches that have evolved significantly in the past few years. US-based assets incorporating these approaches have increased 76% in the last two years alone. Sustainable, Responsible and Impact Investing in US $ billions ESG Incorporation Total INVESTING WITH IMPACT 1 Report on the Sustainable and Responsible Investing Trends in the United States, US SIF Foundation, 2014

5 Investment Performance The MSCI KLD 400 Index invests in companies that meet best-in-class environmental, social and governance (ESG) criteria and have delivered favorable performance with comparable risk relative to the S&P 500 Index. Cumulative Return (%) MSCI KLD 400 Social Index S&P 500 Index Annualized Return (%) MSCI KLD 400 Social Index S&P 500 Index 9.69 Cumulative Excess Return vs. S&P 500 Index Assets in sustainable and responsible investments now total $6.57 trillion, or nearly 1 in every 6 dollars in the U.S.* 5 INVESTING WITH IMPACT Sources: Zephyr Analytics and Report on the Sustainable and Responsible Investing Trends in the United States, US SIF Foundation, *This number excludes separately managed accounts. Note: Past performance is not a guarantee of comparable future results. The index returns are illustrative and shown for comparative purposes only. They do not represent the performance of any specific investments. An investor cannot invest directly in an index.

6 Investment Process is Systematic and Risk-aware The Investing with Impact Portfolios on the Select UMA platform are constructed with the same risk-aware process leveraged for all firm-discretionary portfolios. Identify active risks in the portfolio Seek to allocate risk efficiently Analyze variations in risk, managers and their strategies Risk Management Asset Allocation Market analysis and model portfolio allocation guidance based on the Morgan Stanley Wealth Management Global Investment Committee Establish strategic framework Opportunistically over- and underweight asset classes Utilize multi-factor analysis to determine optimal weightings Emphasize high-conviction, complementary independent, thirdparty managers Dedicated portfolio construction team of 20 professionals Portfolio Construction Manager Analysis Due diligence conducted across separately managed accounts, mutual funds, ETFs and alternative strategies Dedicated third-party manager assessments with opinion-based manager analysis Evaluate managers approach using the Investing with Impact Framework 6 INVESTING WITH IMPACT

7 Managers Undergo Extensive Analysis Prior to Inclusion Morgan Stanley leverages multiple professional teams to determine the third-party asset managers and investment products appropriate for inclusion. MANAGER UNIVERSE Morgan Stanley s Global Investment Manager Analysis team leverages quantitative, qualitative and operational due diligence conducted by 30 dedicated analysts on more than 1,300 products, including separately managed accounts, mutual funds and ETFs that are available on our advisory platform. Identify managers with a clear approach to Investing with Impact Filter for Asset Class and Investment Style Working List BEST FIT MANAGERS DETERMINED BY PORTFOLIO ADVISORY SERVICES* Presents tactical opportunity Complements other holdings QUANTITATIVE FILTER Peer analysis Rolling period returnsbased style analysis Modern Portfolio Theory statistics Holdings-based attribution Risk-based analysis QUALITATIVE TEST Firm/People Organizational structure Competitive advantage Investment philosophy Process and strategy Performance expectations Exhibits consistent process and contribution to overall portfolio risk Expresses thematic view *Portfolio Advisory Services (PAS) is the Investing with Impact strategies portfolio manager 7 INVESTING WITH IMPACT

8 Investing with Impact Framework Morgan Stanley s Investing with Impact Framework enables clients to align investment decisions with impact priorities across their portfolio. Minimize Objectionable Impact VALUES ALIGNMENT ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG) INTEGRATION SECTOR EXPOSURE IMPACT INVESTING Targeted Impact DEFINITION Managing exposures by intentionally avoiding investments based on specific criteria Proactively considering ESG criteria alongside financial analysis to identify opportunities and risks during investment process Focusing on themes and sectors dedicated to solving sustainability-related domestic and global challenges Allocating to investment funds focused on private enterprises structured to deliver specific positive social and/or environmental impacts IMPACT INVESTMENT CHARACTERISTICS Public equity, Public fixed income, alternatives Differentiated by restriction criteria and degree of shareholder advocacy Not proactively seeking environmental and social impact Public equity and public fixed income Differentiated by ESG integration process and degree of shareholder advocacy May also include screens Public equity and public fixed income Differentiated by macroanalysis, sustainability research and sector focus Differentiated by impact approach, regional focus, liquidity and impact reporting May have investor restrictions INVESTMENT EXAMPLES Mutual fund that excludes companies from buy universe (e.g. tobacco, firearms, coal mining companies) Separately Managed Account (SMA) incorporating analysis of ESG performance into stock selection process Exchange-traded fund (ETF) tracking index of renewable energy companies A private equity fund focused on emerging consumers or project level renewable energy investment. PUBLIC MARKETS PRIVATE MARKETS 8 INVESTING WITH IMPACT

9 GIFT: Impact Pools Portfolio Construction Values-Alignment Exclude companies and/or sectors that are in opposition to values. For example: tobacco, alcohol, weapons. ESG-Integrated Examples of Environmental, Social and Governance criteria include the corporate carbon footprint, employee health and safety, workforce diversity policies, business ethics. Sector Exposure Invest in themes and sectors creating solutions to targeted ESG issues. For example: resource scarcity, community development including affordable housing. No Direct Mission Alignment Values Alignment ESG- Integration Sector Exposure 9 INVESTING WITH IMPACT

10 GIFT: Impact Pools Overview. The Investing with Impact Pools in the GIFT donor advised fund employ highly regarded third-party investment managers with demonstrated experience in generating positive environmental and social impact to construct welldiversified portfolios across the continuum of Investing with Impact approaches. Eligible investments include separately managed accounts, mutual funds and exchange-traded funds (ETFs). INVESTING WITH IMPACT POOL - EQUITY 1 Account Minimum: $25,000 INVESTING WITH IMPACT POOL BALANCED 2 Account Minimum: $25,000 US Multi Cap Growth Equity, 12% US Small / Mid Value Equity, 9% Developed Int l Equity, 30% US Large Cap Value, 19% US Multi Cap Growth Equity, 21% US Multi Cap Core Equity, 21% US Core Fixed Income, 23% US Short-Term Fixed Income, 20% Developed International Equity, 17% US Multi Cap Core Equity, 12% US Large Cap Value, 11% US Small / Mid Value Equity, 5% The above allocations are as of March 1, 2015 and are subject to change. 1 Inception date: February 6, Inception date: January 30, INVESTING WITH IMPACT

11 GIFT: Investing with Impact Pool - Equity Manager Name Strategy Asset Class Allocation (%) Investing with Impact Focus ClearBridge Investments ClearBridge Multi-Cap Growth ESG SMA US Multi Cap Growth Equity 12.0 Riverbridge Partners Riverbridge ECO Leaders SMA US Multi Cap Growth Equity 9.0 ESG-Integrated Neuberger Berman NB Socially Responsible Investing Mutual Fund (NBSLX) US Multi Cap Core Equity 10.5 Blackrock ishares KLD 400 Social ETF US Multi Cap Core Equity 10.5 ClearBridge Investments Ariel Investments ClearBridge Investments Calvert Investments Clearbridge Socially Aware Large Value SMA Ariel Appreciation Mutual Fund (CAAPX) Clearbridge International Growth ADR ESG Calvert International Equity Mutual Fund (CWVGX) US Large Cap Value 19.0 US Small / Mid Value Equity 9.0 Values Alignment Developed International Equity 16.0 Developed International Equity 14.0 TOTAL GLOBAL EQUITIES Values Alignment, Shareholder Notes: As of February 6, SMA = Separately Managed Account ETF = Exchange-Traded Fund The sample portfolio is provided for informational purposes only and should not be deemed to be a recommendation to purchase or sell the securities mentioned. There is no guarantee that any securities mentioned will be held in a client account. It should not be assumed that the securities transactions or holdings discussed were or will be profitable. Information subject to change at any time without notice. 11 INVESTING WITH IMPACT

12 GIFT: Investing with Impact Pool - Balanced Manager Name Strategy Asset Class Allocation (%) Investing with Impact Focus ClearBridge Investments ClearBridge Multi-Cap Growth ESG SMA US Multi Cap Growth Equity 7.0 Riverbridge Partners Riverbridge ECO Leaders SMA US Multi Cap Growth Equity 5.0 ESG-Integrated Neuberger Berman NB Socially Responsible Investing Mutual Fund (NBSLX) US Multi Cap Core Equity 6.0 Blackrock ishares KLD 400 Social ETF US Multi Cap Core Equity 6.0 ClearBridge Investments Ariel Investments ClearBridge Investments Calvert Investments Vanguard Community Capital Clearbridge Socially Aware Large Value SMA Ariel Appreciation Mutual Fund (CAAPX) Clearbridge International Growth ADR ESG SMA Calvert International Equity Mutual Fund (CWVGX) Vanguard Short Term Bond ETF (BSV) CRA Qualified Investment Mutual Fund (CRANX) Notes: As of January 30, SMA = Separately Managed Account ETF = Exchange-Traded Fund US Large Cap Value 11.0 US Small / Mid Value Equity 5.0 Values Alignment Developed International Equity 9.0 Developed International Equity 8.0 US Short-Term Fixed Income Values Alignment, Shareholder US Core Fixed Income 23.0 ESG-Integrated, Sector Exposure TOTAL GLOBAL EQUITIES 57.0 TOTAL GLOBAL FIXED INCOME 43.0 The sample portfolio is provided for informational purposes only and should not be deemed to be a recommendation to purchase or sell the securities mentioned. There is no guarantee that any securities mentioned will be held in a client account. It should not be assumed that the securities transactions or holdings discussed were or will be profitable. Information subject to change at any time without notice. 12 INVESTING WITH IMPACT

13 Disclosures Although the statements of fact and data in this presentation have been obtained from, and are based upon, sources that Morgan Stanley believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions are as of the date of this presentation and are subject to change without notice. This presentation is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this material may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor s individual circumstances and objectives. Past performance is not a guarantee of future results. Diversification and asset allocation do not ensure a profit or protect against a loss. Investing in the markets entails the risk of market volatility. The value of all types of securities, including mutual funds and exchange-traded funds (ETFs), may increase or decrease over varying time periods. An investment in an exchange-traded fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on exchange in the relevant securities market, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock prices. The investment return and principal value of ETF investments will fluctuate, so that an investor's ETF shares, if or when sold, may be worth more or less than the original cost. To the extent the investments depicted herein represent international securities; you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets. International investing may not be suitable for everyone. Equity securities prices may fluctuate in response to specific situations for each company, industry, market conditions and general economic environment. Companies paying dividends can reduce or cut payouts at any time. Fixed income securities are subject to interest rate risk, credit risk, prepayment risk, market risk, and reinvestment risk. Fixed income securities, if held to maturity, may provide a fixed rate of return and a fixed principal value. Fixed income securities prices fluctuate and if sold prior to maturity, may be worth more or less than their original cost. 13 INVESTING WITH IMPACT

14 Disclosures (continued) In Consulting Group s advisory programs, alternative investments are limited to US-registered mutual funds, separate account strategies and exchange-traded funds (ETFs) that seek to pursue alternative investment strategies or returns utilizing publicly traded securities. Investment products in this category may employ various investment strategies and techniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives and options, which can increase volatility and the risk of investment loss. Alternative investments are not suitable for all investors. Investors should carefully consider the investment objectives, risks and charges and expenses of a mutual fund or exchange-traded fund before investing. The prospectus contains this and other information about the mutual fund or exchange-traded fund. To obtain a prospectus, contact your Financial Advisor or Private Wealth Advisor. Please read the prospectus carefully before investing. INDEX DEFINITIONS S&P 500 Index Regarded as the best single gauge of the US equities market, this capitalization-weighted index includes a representative sample of 500 leading companies in leading industries of the US economy. MSCI KLD 400 Social Index The MSCI KLD 400 Social Index is a market capitalization-weighted Common Stock Index, consisting of 400 corporations that have passed multiple, broad-based social screens. The index is maintained by Kinder, Lydenberg, Domini & Co., Inc. and is intended to serve as a proxy and benchmark for the universe of stocks from which social investors might choose. The index was set at a value of 100 as of May 1, Since its inception, fewer than one change per month has been made in the index, primarily due to takeovers and acquisitions. Morgan Stanley GIFT, Inc. is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and Morgan Stanley Global Impact Fund Trust is a donor advised fund. Various divisions of Morgan Stanley Smith Barney LLC (the Firm) provide investment management and administrative services to Morgan Stanley GIFT. For more information about GIFT, please contact your Morgan Stanley Financial Advisor or Private Wealth Advisor. 2015Morgan Stanley Smith Barney LLC. Member SIPC. Consulting Group is a business of Morgan Stanley Smith Barney LLC. 14 INVESTING WITH IMPACT