Meeting the. How should I invest my money?

Transcription

1 Meeting the How should I invest my money? CHALLENGE

2 Keeping Your Retirement on the Mark Takes Serious Effort As you consider all of the options in the Prudential Employee Savings Plan (PESP), the one question you may ask yourself is, How should I invest my money? For many, this can be a difficult question. Not everyone is comfortable making investment decisions, and others just can t find the time to sort through all of the options. Fortunately, PESP offers GoalMaker, an optional asset allocation program that is available at no additional cost and makes choosing an investment mix easy. This asset allocation program was designed to help participants of PESP target the most appropriate choices for their retirement goals. Using the investment options offered through PESP, GoalMaker creates 12 model portfolios that fit the profile of nearly any type of investor. All you need to do to use this program is follow three easy steps: STEP1: Determine your personal investment style and years to retirement. If you re not sure of your investor personality, log on to the Online Retirement Center at and fill out the Investor Style Quiz. This questionnaire will help you determine your personal investor style. Once you know your investor personality, you can figure out your years to retirement using this simple calculation: Planned Retirement Age Current Age Years to Retirement While every investor has different financial needs and expectations, each generally falls into one of three investor styles: Conservative Wants to minimize risk and maintain principal Seeks stability; little fluctuation in the value of investment MODERATE Willing to sacrifice safety of principal for potentially greater returns Can tolerate modest fluctuations AGGRESSIVE Seeks to maximize investment returns Tolerates substantial fluctuations 2

3 STEP 2: Select one of the 12 GoalMaker model portfolios. Years to Retirement 0 5 Years 6 10 Years Years Model Portfolios Conservative Moderate 24% 35% 44% 40% 32% 25% 23% 34% 39% 51% 26% 27% 23% 16% 51% 19% 65% 26% Aggressive 54% 65% 80% 21% 16% 25% 19% 9% 11% Based on your answers from Step 1, select one of the 12 GoalMaker model portfolios built from the investments offered in PESP.* Just find your personal investor style (Conservative, Moderate, Aggressive) and Years to Retirement to identify the portfolio that matches your investment needs. Then locate the assigned model portfolio in the chart below for your selected investments Years 70% 14% 16% 85% 7% 8% 100% Stable Value Fixed Income Stocks Conservative moderate AGGRESSIVE Years to Retirement 0-5 Yrs 6-10 Yrs Yrs 16+ Yrs 0-5 Yrs 6-10 Yrs Yrs 16+ Yrs 0-5 Yrs 6-10 Yrs Yrs 16+ Yrs Investment Options Stable Value PESP Fixed Rate Fund Fixed Income Core Bond Enhanced Index/PIM Large-Cap Stock Growth Prudential Jennison Growth Fund Z Large-Cap Stock Value Large Cap Value/LSV Asset Management Fund Small/Mid-Cap Stock Growth Prudential Jennison Mid-Cap Growth Fund Q Small/Mid-Cap Stock Value Artisan Mid Cap Value Fund A International Stock QMA International Developed Markets Index Fund 44% 39% 23% 14% 35% 23% 16% 7% 21% 16% 9% 0% 32% 27% 26% 16% 25% 26% 19% 8% 25% 19% 11% 0% 5% 7% 11% 15% 8% 11% 14% 17% 12% 14% 16% 19% 5% 7% 11% 15% 8% 11% 14% 17% 12% 14% 16% 19% 3% 4% 6% 8% 5% 6% 7% 10% 6% 7% 10% 13% 3% 4% 6% 8% 5% 6% 7% 10% 6% 7% 10% 13% 8% 12% 17% 24% 14% 17% 23% 31% 18% 23% 28% 36% * These portfolios are provided as samples and not as investment recommendations. The portfolios are based on generally accepted investment practices and take into account the principles of modern portfolio theory, in which allocations are adjusted in an effort to achieve maximum returns for a given level of risk. You may want to consider other assets, income and investments you may have before applying these models to your individual situation. Please note that in addition to the specific investments used in the GoalMaker portfolios, other investments are available under PESP. The GoalMaker portfolios are subject to change including, for example, the replacement of investment options and adjustments in the allocations within the portfolios. You will be notified in writing in advance of any such change. Past performance of investments or asset classes does not guarantee future results. Source: Prudential Retirement. All investing involves various risks, such as fixed income (interest rate), default, small cap, international and sector including the possible loss of principal. 3

4 STEP 3: Enroll in GoalMaker. Information about enrolling in GoalMaker is available via the Prudential Intranet at Inside the Rock. Click on the My Prudential tab, and then on the Prudential Employees Savings Plan (PESP) link. Then click on the LOGIN PESP online link and click View Details. In the left-hand margin, click GOALMAKER. Next, click Get Started. You can also obtain GoalMaker information online at or by calling PRU-PESP ( ). Customer Service Representatives are available Monday through Friday (except holidays), 8 a.m. to 9 p.m. ET. If you are hearingimpaired, please contact your local relay service. GoalMaker offers Automatic Rebalancing If one investment option in your portfolio grows faster (or declines faster) than another, it may shift your original asset allocation. For example, an investment option with high investment returns could become a larger percentage of your total portfolio than was intended. But by selecting a GoalMaker model portfolio, you direct Prudential to automatically rebalance your account quarterly to ensure that it matches your initial investment allocation. This means that your assets invested in the PFI Common Stock Fund (other than the 50% of the company match automatically invested in the PFI Common Stock Fund) will be sold when you enroll in GoalMaker. Please note that if you are a Designated Person with assets other than the company-directed match invested in the PFI Common Stock Fund, you must pre-clear your enrollment in GoalMaker during an open trading window, and you will be restricted from enrolling in GoalMaker during a closed trading window until the next open trading window. More information regarding these restrictions can be found by reviewing Prudential s Personal Security Trading Policy, which is available on the Compliance intranet site or by contacting one of the following individuals in Prudential s Compliance Department: Frank Adamo at , Richard Baker at , or Jomara Negron at In addition, with its Age Adjustment feature, GoalMaker can automatically update model portfolio allocations to keep them consistent with your current age and expected years until retirement. And, of course, you can opt in or out of GoalMaker at any time without charge or penalty. GoalMaker picks up where other options leave off GoalMaker builds on the philosophy of tailoring investments to your individual needs and attitude toward investing. The model portfolio options are based on the most important factor for your retirement you. It s a program that delivers solutions to individuals who may be uncomfortable making these investment decisions for themselves or who simply may not have the time to research which options work best for them. Application of asset allocation and diversification concepts does not ensure safety of principal and interest. It is possible to lose money by investing in securities. 4

5 GoalMaker Key Questions & Answers GoalMaker can help take the confusion out of planning for retirement by helping you select an asset allocation mix to meet your retirement objectives. The following questions and answers will help you understand the advantages of GoalMaker. 1. What is GoalMaker? GoalMaker is an asset allocation tool available at no additional cost, designed to help you determine how to invest your PESP contributions utilizing the investment options in your plan. Using these existing investment options as building blocks, GoalMaker lets you select from 12 different model portfolios. Model portfolios are based upon your personal investor style conservative, moderate or aggressive and your years to retirement. These model portfolios make it easier for you to diversify your holdings without becoming an expert at asset allocation. GoalMaker offers an efficient approach for participants who prefer to have professional asset allocation. Keep in mind that application of asset allocation and diversification concepts does not ensure a profit or protect against loss in a declining market. It is possible to lose money by investing in securities. 2. What is asset allocation? Asset allocation is the process of spreading your money among different types of asset classes such as stocks, bonds and stable value investments. How you allocate your assets is one of the most important investment decisions you can make. Investment mix has a great influence over your potential long-term returns. By dividing your portfolio among a variety of asset classes, you minimize your reliance on any one investment, which helps reduce your risk. Application of asset allocation and diversification concepts does not ensure safety of investments. It is possible to lose money by investing in securities. 3. What if I don t know what kind of investor I am? Complete the Investor Style Quiz, which will help you identify whether you tend to be a conservative, moderate or aggressive investor. 4. what are the different PESP GoalMaker model portfolios? The GoalMaker model portfolios are designed for conservative, moderate and aggressive investors (four different allocation mixes within each investor type, for a total of 12 portfolios). Each model portfolio contains differing quantities of stocks, bonds and stable value investment options depending upon your years to retirement and investor style. 5. How can I select a GoalMaker model portfolio? This GoalMaker brochure is designed to help you identify your investment profile and decide which investment strategy may work for you. Most investors know they have to assume some risk to potentially achieve a greater reward. The more time you have until retirement, the greater the amount of risk you may want to take. Determining precisely how you allocate your money among the different categories of investments will depend upon your personal investor style. By helping you determine this investor style and your years to retirement, GoalMaker suggests alternate methods to diversify your investments. 5

6 6. If I currently contribute to PESP, how can I enroll in one of the GoalMaker model portfolios? Simply follow the steps outlined in this brochure. If you enroll in GoalMaker, all of your PESP account assets (other than the 50% of the company match automatically invested in the PFI Common Stock Fund) will be invested in the GoalMaker model portfolio that you choose. Please note that if you are a Designated Person with assets, other than the Company Match 2, invested in the PFI Common Stock Fund, you must pre-clear your enrollment in GoalMaker during an open trading window, and you will be restricted from enrolling in GoalMaker during a closed trading window until the next open trading window. More information regarding these restrictions can be found by reviewing Prudential s Personal Security Trading Policy, which is available on the Compliance intranet site or by contacting one of the following individuals in Prudential s Compliance Department: Frank Adamo at , Richard Baker at , or Jomara Negron at what happens to my account after I enroll in GoalMaker? Your eligible account balance will automatically rebalance according to the model portfolio you select. (Rebalancing is the process by which exchanges are performed to move money among your funds. The resulting balances are then aligned with the allocation percentages of the GoalMaker model portfolio you selected.) Quarterly, your account will automatically rebalance to the original target allocation. In addition, new contributions also will be invested based upon the model portfolio you chose. The portfolios do not attempt to time short-term market moves. Instead, the model portfolios maintain a long-term focus. By rebalancing quarterly, the percentage of stocks, bonds and stable value investments always stays on target. GoalMaker keeps your investment strategy on track! 8. will I be charged exchange fees or any other fees when my account is rebalanced? No fees will be incurred when you rebalance. 9. How are loan payments affected if I enroll in GoalMaker? Shortly after the end of each calendar quarter you will receive a summary of the investment performance of the investment options offered through your plan. 10. How can I follow the investment performance of my GoalMaker portfolio? Shortly after the end of each calendar quarter you will receive a summary of the investment performance of the investment options offered through your plan. 11. may I make allocation changes and exchanges (transfers) from my GoalMaker portfolio to other investment options in PESP, or even within GoalMaker? You may make an exchange among funds after you ve selected GoalMaker. Please note, unless you opt out of the GoalMaker program, your account will rebalance to your original GoalMaker model portfolio target allocation percentages on your next plan rebalancing date. If you change allocation percentages (i.e., future investment election percentages), however, you will be automatically removed from the GoalMaker program. 12. What if I change the contribution percentage of my future contributions? Your contributions will continue to be invested in the GoalMaker model portfolio you selected, at the new percentage you have chosen. 13. what happens to the employer match in the company stock fund when I am invested in GoalMaker? Fifty percent of each employer matching contribution to PESP is automatically invested directly in the PFI Common Stock Fund (Company Match 2). GoalMaker does not affect the portion of the employer match that is automatically invested in the PFI Common Stock Fund, unless you did not give investment direction and defaulted into GoalMaker, in which case your Company Match 2 funds will be rebalanced into GoalMaker at the end of each quarter. However, it will affect the other half of the match (Company Match 1) if you have voluntarily chosen to invest in the PFI Common Stock Fund. When you first enroll in GoalMaker, the Company Match 1 assets invested in the PFI Common Stock Fund will be sold. Please note that if you are a Designated Person with assets, other than the Company Match 2, invested in the PFI Common Stock Fund, you must pre-clear your enrollment in GoalMaker. 6

7 14. what if I don t want to invest in a GoalMaker model portfolio? Participation in GoalMaker is not mandatory. If you are comfortable making financial decisions, you may decide to allocate your assets to match your unique needs on your own. The choice is yours. Whether you use GoalMaker or create your own portfolio, remember to review your investments at least annually to help ensure they continue to meet your investment objectives. 15. May I elect to participate in more than one GoalMaker model portfolio? No. However, as your investment needs change, for example, as the number of years to your retirement decreases, you may elect a different model portfolio than the one you first chose. 16. How often can I change my GoalMaker model portfolio? As often as you wish. 17. will my GoalMaker model portfolio automatically be adjusted as I get closer to retirement? GoalMaker s Age Adjustment feature will automatically adjust your investments based on changes in the number of years you have until retirement. Let s say, for example, you choose a conservative investor portfolio with years to retirement. Ten years before your expected retirement age, your account will automatically be updated to the conservative investor model portfolio with 6-10 years to retirement. If you are currently enrolled in GoalMaker and would like to take advantage of this feature, simply log on to Select GoalMaker in the left navigation bar of your PESP Account Detail screen, then click on the Turn On Age Adjustment link at the bottom of the following page. You can also call PRU-PESP ( ). 18. If I am a Designated Person, do I have to pre-clear changes in my Goalmaker election? All employees classified as Designated Persons are subject to Prudential s Personal Securities Trading Policy. Therefore, for those employees classified as Designated Persons, enrollment in Goalmaker may be restricted during a closed trading window until the next open trading window and may need to be pre-cleared during an open trading window. However, once you are enrolled in GoalMaker, you do not have to pre-clear asset allocation changes in GoalMaker. More information regarding these restrictions can be found by reviewing Prudential s Personal Security Trading Policy, which is available on the Compliance intranet site or by contacting one of the following individuals in Prudential s Compliance Department: Frank Adamo at ; Richard Baker at , or Jomara Negron at Are there extra fees to participate in GoalMaker? There are no extra fees to participate in GoalMaker. Unlike other service providers who charge participants for programs similar to GoalMaker, there is no additional charge to participants for GoalMaker utilization. Investment Responsibility PESP is intended to be a plan described in Section 404(c) of the Employee Retirement Income Security Act (ERISA). As a PESP participant, you have the authority and responsibility to decide how to invest your PESP account among the investment options available under PESP. You are responsible for your investment decisions. Neither Prudential nor the plan s investment fiduciary, nor any of Prudential s employees or agents, are liable for any investment losses resulting from your decisions. Always keep in mind that your investment decisions are subject to the provisions of Prudential s Personal Securities Trading Policy. The PESP Administrative Committee may adopt administrative procedures designed to ensure that transactions resulting from the elections and directions from a PESP participant, beneficiary or alternate payee under a Qualified Domestic Relations Order do not violate applicable federal securities laws or Prudential Financial, Inc. s policies on compliance with them. 7 6

8 280 Trumbull Street Hartford, CT The PESP Fixed Rate Fund is a group annuity product issued by The Prudential Insurance Company of America (PICA), Newark, NJ Amounts contributed to the contract are deposited in PICA s general account. Payment obligations and the fulfillment of any guarantees specified in the group annuity contract are insurance claims supported by the full faith and credit of PICA. PICA periodically resets the interest rate credited on contract balances, subject to a minimum rate specified in the group annuity contract. Past interest rates are not indicative of future rates. This product is neither a mutual fund nor a bank product. The obligations of PICA are not insured by the FDIC or any other federal governmental agency. Prudential Retirement is compensated in connection with this product when general account investment returns exceed the interest credited on contract balances. In addition, the interest crediting rate is reduced to compensate Prudential Retirement for administering this fund. Other than such compensation, there are no additional charges imposed that reduce the interest for administering this fund. Other than such compensation, there are no additional charges imposed that reduce the interest rate credited. If Prudential Retirement s aggregate compensation from this product and from other plan investment products exceeds the costs of servicing your plan, Prudential Retirement earns a profit; otherwise we incur a loss. Investors should consider a fund s investment objectives, risks, charges and expenses before investing. The prospectus and, if available, the summary prospectus contain complete information about the investment options available through your plan. Please call for a free prospectus and, if available, a summary prospectus that contain this and other information about our mutual funds. You should read the prospectus and the summary prospectus, if available, carefully before investing. It is possible to lose money when investing in securities. Shares of the funds are offered by Prudential Investment Management Services LLC (PIMS), Three Gateway Center, 14th Floor, Newark, NJ PIMS is a Prudential Financial company. Participant Service Representatives are registered representatives of PIMS. Prudential Retirement s group variable annuity contracts are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, a Prudential Financial company. Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc., and its related entities, registered in many jurisdictions worldwide PEWS004 02/2012 Published 02/2012