Funds Investing in the Strategies of Strategies Capital Management
Collective Investment Fund Overview A Collective Investment Fund (CIF) is an institutional-only investment structure that is exclusively available to certain types of tax-exempt retirement plans. CIFs are sponsored by banks or trust companies (e.g. TD Ameritrade Trust Company) that act as trustees and are responsible for the CIFs management. Each CIF s structure allows for the combination of assets from different retirement plan accounts into a single fund with a specific investment strategy or objective, thereby leveraging the benefits of economies of scale. CIFs may invest in a wide range of active or passive vehicles, including equities, fixed income, mutual funds (including those with exposure to alternative asset classes such as real estate, commodities, and private investments), Exchange Traded Funds (ETFs), and other CIFs. Key Characteristics and Advantages Over the past few years, defined contribution plan sponsors have become increasingly interested in CIFs for two primary reasons. First, CIFs have the potential to be more cost effective than mutual funds. Second, CIFs can leverage a broad variety of asset classes and vehicles, so they can be used to effectively deliver absolute performance and risk/return within a defined contribution plan. CIFs have many distinguishing characteristics. They are: Uniquely institutional, since only tax-exempt retirement plans are allowed to invest Flexible because they are able to leverage a broad scope of investment types The popularity of CIFs in the 401(k) marketplace reflects a variety of advantages. Often associated with lower operational expenses compared to mutual funds Free of proprietary product requirements Free of redemption fees The breadth of investment offerings in these vehicles has grown markedly in recent years, and operational enhancements including daily valuation, automated trading via the NSCC, performance data, and holdings reports have made CIFs a viable and appealing option for many defined contribution plans. CIFs benefit plan sponsors and participants by providing access to institutional and boutique investment managers resources that are otherwise rarely available for small and mid-size plans.
CIFs are: Bank maintained, pooled funds that are an investment option available to participants in taxqualified, employer-sponsored retirement plans Institutional-only investment vehicles created specifically for retirement plans, including defined contribution plans Similar to mutual funds in that they are composed of pooled assets invested with a specific philosophy or strategy Valued daily Subject to applicable state banking, DOL (Department of Labor) regulations, and reporting requirements CIFs are not: Mutual funds registered under the 1940 Investment Company Act, as amended (1940 Act), which have a prospectus Traded on an exchange or over the counter Securities required to be registered under the 1933 Securities Act or applicable securities laws of any state or other jurisdiction strategictargetfunds.com 2
Funds Subadvised by Strategies Capital Management Funds Overview The Collective Investment Funds (CIFs) seek to provide retirement plan participants access to a true institutional investment philosophy. Unlike retail-oriented target date and target risk funds that often use proprietary investments with limited diversification potential, the Funds provide: Access to 10 12 distinct asset classes (most retail funds provide 3 5) No underlying proprietary investment requirements A dynamic core and satellite allocation strategy that incorporates factor investing Exposure to firms such as Dimensional Fund Advisors, PIMCO, JPMorgan Asset Management, AQR Asset Management, BlackRock Funds, Vanguard and more Plan participants now have the ability to invest their retirement portfolio in the same manner as large institutional investors. This can translate into effective diversification, the flexibility to employ specialized asset managers in various disciplines, low cost and, most importantly, the potential for competitive performance with reduced risk characteristics. There are two distinct groups of Funds. The Target Date funds are designed for plan participants that would like the simplicity of selecting a specific anticipated retirement date, while the Target Risk funds seek to maintain a consistent risk and return profile. The Funds may be suited for retirement plan participants who are looking to invest for a specific retirement date. Funds The Target Date Funds available to your plan: Income 2015 2025 2035 2045 2055 The Target Risk Funds available to your plan: Conservative Moderately Conservative Moderate Moderate Growth Growth 3
Strategies Capital Managements Investment Philosophy Strategies Capital Management (SCM) has provided asset management services since its establishment in 1993. Completely independent since inception, SCM advises high net worth and institutional clientele. For more than two decades, SCM has focused on the fiduciary aspects of investment consulting, combining knowledge and experience to guide institutional and individual investors in all economic and market environments. The SCM investment philosophy is rooted in financial academia, including modern portfolio theory, and is based on fundamental principles such as the efficient market hypothesis and asset and factor allocation as the key determinants of portfolio risk and return. In accordance with these principles, SCM has constructed target date and target risk CIFs designed to provide: Enhanced diversification from a dynamic core and satellite allocation Access to low cost, non-proprietary, manager-of-managers Broad asset class and factor diversification with limited manager exposure High absolute and risk-adjusted returns SCM strives to design better target date and target risk funds that improve on traditional, retailoriented stock and bond products. The SCM process is built using true institutional money management, a commitment to low costs and a best-of-breed approach. As a product of many years of direct experience with the capital markets, these funds are designed to perform in multiple environments. SCM is an institutional firm that manages assets based on a proven philosophy and established processes a money manager for your retirement assets. strategictargetfunds.com 4
Target Date Funds Target Date Funds are associated with a year, which represents the time at which an investor expects to begin withdrawing money from the fund. For each fund, asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to fixed income and cash will increase. Upon reaching its target date, each fund will seek to achieve an asset allocation of 30 percent equity asset class mutual funds and 70 percent fixed income mutual funds. The Target Date Funds seek to invest in passive and active pooled investment vehicles that are consistent with the Fund s investment objective, including, but not limited to, mutual funds, commingled funds and ETFs. The Fund employs an investment philosophy focused on low fees, low turnover, and prudent risk management using a core and satellite investment strategy. Income Fund The Income Fund is a well-diversified Fund with a conservative asset allocation. The Fund generally seeks a strategic asset allocation of approximately 35% in equities, 55% in fixed-income, and 10% in alternative asset classes (such as domestic real estate, foreign real estate and commodities (e.g., oil, gas and timber)) and cash (including stable value products). These allocations may vary up to +/-10 percentage points. Originally established with a target-date of 2005, this Fund may be appropriate for investors that started taking distributions from their retirement funds around that target date. 2015 Fund The 2015 Fund is a well-diversified Fund with an asset allocation strategy that will become more conservative as the target date approaches. The Fund initially seeks to allocate approximately 45% in equities, 40% in fixed-income, and 15% in alternative asset classes (such as domestic real estate, foreign real estate and commodities (e.g., oil, gas and timber)) and cash (including stable value products). These allocations may vary up to +/-10 percentage points. This Fund may be appropriate for investors that plan to begin taking distributions in or around the year 2015. 2025 Fund The 2025 Fund is a well-diversified Fund with an asset allocation strategy that will become more conservative as the target date approaches. The Fund initially seeks to allocate approximately 55% in equities, 30% in fixed-income, and 15% in alternative asset classes (such as domestic real estate, foreign real estate and commodities (e.g., oil, gas and timber) and cash (including stable value products). These allocations may vary up to +/-10 percentage points. This Fund may be appropriate for investors that plan to begin taking distributions in or around the year 2025. 2035 Fund The 2035 Fund is a well-diversified Fund with an asset allocation strategy that will be modified to become more conservative as the target date approaches. The Fund will initially seek to invest approximately 65% in equities, 15% in fixed-income, and 20% in alternative asset classes (such as domestic real estate, foreign real estate and commodities (e.g., oil, gas and timber) and cash (including stable value products). These allocations may vary up to +/-10 percentage points. This Fund may be appropriate for investors that plan to begin taking distributions in or around the year 2035. 2045 Fund The 2045 Fund is a well-diversified Fund with an asset allocation strategy that will become more conservative as the target date approaches. The Fund seeks to invest approximately 70% in equities, 10% in fixed-income, and 20% in alternative asset classes (such as domestic real estate, foreign real estate and commodities (e.g., oil, gas and timber) and cash (including stable value products). These allocations may vary up to +/-10 percentage points. This Fund may be appropriate for investors that plan to begin taking distributions in or around the year 2045. 2055 Fund 5 The 2055 Fund is a diversified fund with an asset allocation that will become more conservative as the target date approaches. The Fund generally seeks a strategic asset allocation of approximately 70%, in equities, 10% in fixed income, and 20% in alternative asset classes (such as domestic real estate, foreign real estate and commodities (e.g., oil, gas, and timber) and cash (including stable value products). These allocations may vary up to +/-10 percentage points. This Fund may be appropriate for investors that plan to begin taking distributions in or around the year 2055. The Fund will invest in passive and active pooled investments.
Target Date Funds The Target Date Funds are designed to adjust over time to achieve the ideal investment glide path. Income Fund Ongoing allocation 2015 Fund Today In 10 years 2025 Fund Today In 10 years In 20 years 2035 Fund Today In 10 years In 20 years In 30 years 2045 Fund Today In 10 years In 20 years In 30 years In 40 years 2055 Fund Today In 10 years In 20 years In 30 years In 40 years In 50 years AGGRESSIVE Portfolio Mix CONSERVATIVE Portfolio Mix KEY Alternative Commodities International Equality International Fixed Income Money Market Real Estate US Equity US Fixed Income strategictargetfunds.com 6
Target Risk Funds Target Risk Funds seek to maintain specific levels of risk and return, rather than targeting specific dates. You will need to make adjustments to your asset allocation in order to reduce risk as your targeted retirement date approaches. Each of the Target Risk Funds below is designed for use as a completely diversified strategy or as a solid foundation for a core-satellite strategy. Conservative Fund The Risk Conservative Fund is a diversified asset allocation fund that invests primarily in fixed income through mutual funds, ETFs, or other pooled funds. The primary investment objective of the Conservative Fund is income with relatively low risk (as measured by volatility) with much of the return expected to be in the form of interest income from domestic and international fixed income instruments. The Conservative Fund will typically have an allocation of 35% equities (both domestic and international) and may utilize alternative strategies to help it pursue its investment objectives. The Fund may use both passive and active investment options. As financial markets and holdings fluctuate in value, the Fund will be rebalanced periodically to maintain its target asset allocation. 45.5% 26% 2.5% 1% 14% 9% 0.5% 1.5% Risk: High Low Moderately Conservative Fund The Risk Moderately Conservative Fund is a diversified asset allocation fund that invests in a mixture of equities, fixed income, and alternative strategies through mutual funds, ETFs, or other pooled funds. The primary investment objective of the Moderately Conservative Fund is moderate risk (as measured by volatility) with some growth. The Moderately Conservative Fund will typically have a Substantial weighting to fixed income with the remaining balance allocated to equities (both domestic and international) and alternative strategies to help it pursue its investment objectives. The Fund may use both passive and active investment options. As financial markets and holdings fluctuate in value, the Fund will be rebalanced periodically to maintain its target asset allocation. 32% 33% 5% 2% 17.5% 7% 0.5% 3% Risk: High Low KEY Alternative Commodities International Equality International Fixed Income Money Market Real Estate US Equity US Fixed Income 7
Moderate Fund The Risk Moderate Fund is a diversified asset allocation fund that invests in a mixture of equities, fixed income, and alternative strategies through mutual funds, ETFs, or other pooled funds. The investment objectives of the Moderate Fund are growth and income and a portion of its assets will be allocated to fixed income in an effort to reduce risk (as measured by volatility) and provide some current income. The Moderate Fund will typically have an equal or heavier weighting allocated to equities (both domestic and international) and alternative strategies balanced with fixed income instruments to help it pursue its investment objectives. The Fund may use both passive and active investment options. As financial markets and holdings fluctuate in value, the Fund will be rebalanced periodically to maintain its target asset allocation. 25% 38.5% 5% 2% 21% 5% 0.5% 3% Risk: High Low Moderate Growth Fund The Risk Moderate Growth Fund is a diversified asset allocation fund that invests in a mixture of equities, fixed income, and alternative strategies through mutual funds, ETFs, or other pooled funds. The primary investment objective of the Moderate Growth Fund is growth and the majority of its assets will be invested in equities (both domestic and international). The Moderate Growth Fund will typically have an allocation to fixed income and alternative strategies to help it pursue its investment objectives. The Fund may use both passive and active investment options. As financial markets and holdings fluctuate in value, the Fund will be rebalanced periodically to maintain its target asset allocation. 12% 45% 7.5% 3% 24.5% 3% 0.5% 4.5% Risk: High Low Growth Fund The Risk Growth Fund is an asset allocation fund that invests in a mixture of equities, fixed income and alternative strategies through mutual funds, ETFs, or other pooled funds. The primary investment objective of the Growth Fund is growth and its assets will be invested predominantly in equities (both domestic and international). The Growth Fund may have an allocation to alternative strategies to help it pursue its investment objectives. All of the Fund s assets may be invested in equities and the Fund may use both passive and active investment options. As financial markets and holdings fluctuate in value, the Fund will be rebalanced periodically to maintain its target asset allocation. 4% 7.5% 3% 51.5% 28% 1% 0.5% 4.5% Risk: High Low Note: Risk charts of the Funds are rated relative to each other. strategictargetfunds.com 8
CIF Trustee & Subadvisor Information Each of the CIFs in the Funds, offered by TD Ameritrade Trust Company, utilize the strategies developed by Strategies Capital Management (Strategies). About TD Ameritrade Trust Company TD Ameritrade Trust Company is a Maine-chartered, non-depository trust company and a wholly-owned subsidiary of TD Ameritrade Holding Corporation. The company is not a member of FINRA/SIPC/NFA. It offers trust and custody services, including back-office support, to a wide range of employee benefit plans. Services are provided through institutional clients only, such as third-party administrators, recordkeepers, and Registered Investment Advisors. In addition, TD Ameritrade Trust Company serves as trustee of each of the CIFs in the StarPath Funds as described in the Fund Summary Document. About Strategies Capital Management Strategies Capital Management (SCM) has provided asset management services since establishment in 1993. Completely independent since inception, they advise high net worth and institutional clients. Over the decades, they have garnered a special expertise in the fiduciary aspects of investment consulting that combines knowledge and experience to guide investors in various economic and market conditions. SCM has designed target date and target risk funds that look to improve on traditional, retail-oriented, stock and bond products. Their investment process is built using true institutional money management, a commitment to low costs and a best of breed approach. Employing many years of direct experience with the capital markets, these funds are intended to perform in various environments. 9 Investment Products: Not FDIC Insured May Lose Value No Bank Guarantee TD Ameritrade Trust Company and Strategies Capital Management are separate, unaffiliated companies. TD Ameritrade Trust Company is a non-depository trust company and acts as a custodian and/or directed trustee. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. 2017 TD Ameritrade