Morgan Stanley 20 Linden Place Red Bank, NJ 07701 (732) 936-3400 THE DURSO WEALTH MANAGEMENT GROUP AT MORGAN STANLEY THE DURSO WEALTH MANAGEMENT GROUP S DISCRETIONARY PORTFOLIO MANAGEMENT INVESTMENT STRATEGIES Investments and services offered through Morgan Stanley Smith Barney LLC. Member SIPC
THE DURSO WEALTH MANAGEMENT GROUP Lawrence Durso, CRPS Managing Director, Wealth Management Portfolio Management Director Financial Advisor Michael Lombardi, CFP Financial Advisor Matthew Sheridan, CFP CPM Portfolio Manager Financial Advisor Roderick Mac Kenzie Portfolio Management Associate As a member of Morgan Stanley s 2016 Chairman s Club, Lawrence brings over 38 years of investment management experience to The Durso Wealth Management Group at Morgan Stanley. Lawrence has appeared in Bloomberg Businessweek, Fortune & Money Magazine. His passion includes creating solutions for unique problems typically associated with Ultra High Net Worth clients and their families. Additionally, he is very involved in volunteering his time to local charities. Lawrence graduated Summa Cum Laude from St. John s University and attained his Master s Degree from Columbia University. As a member of Morgan Stanley s 2016 Pacesetters Club, Michael brings over 10 years of financial planning experience to The Durso Wealth Management Group. He is responsible for all financial & estate planning duties for the group s high net worth clients. He spends his days meeting with client s CPAs, Estate Attorneys & Insurance Professionals. Michael earned his B.S. Degree in Finance from The College of New Jersey in 2006. He currently holds the CERTIFIED FINANCIAL PLANNER designation which is recognized as the standard of excellence for personal financial planning. Matthew is the Portfolio Manager for The Durso Wealth Management Group s discretionary investment strategies. Matthew is in charge of all investment research, risk analysis, monitoring & trading for assets in the team s portfolio management platform. He is responsible for creating & maintaining written communication for the portfolio management clients on a monthly basis. Matthew graduated from Moravian College in 2008 with a Business Management Degree. He also holds the CERTIFIED FINANCIAL PLANNER and Certified Portfolio Manager designation from Columbia University. Rod brings over 40 years of investment experience to The Durso Wealth Management Group. Rod is responsible for capital market & macroeconomic research for the team. Rod has extensive trading experience as he held the position of Vice President and Chief Dealer for Bank of America, Banca Commerciale & Barings Securities. He was a senior advisor in developing junior forex seminars that were instrumental in training future foreign exchange traders. Rod was also an Associate Faculty Member of the London Financial Times Global Learning Center.
Portfolio Management Program Established in 1979 to provide individual investors with a level of personalized portfolio management typically reserved for major institutional investors All portfolios are managed individually on a fully discretionary basis by Financial Advisors at Morgan Stanley who have been qualified by the firm to independently manage client assets based on training, experience and commitment to service As your Portfolio Manager, my team and I can offer you: Direct access to the investment professionals managing your portfolio Personalized service A disciplined, multipart investment process Ongoing client communications and reporting Access to the intellectual capital and global resources of Morgan Stanley
THE DURSO WEALTH MANAGEMENT GROUP INITIAL STRATEGY SELCTION: Investment portfolios that are recommended shall be subject to specified selection criteria and shall be monitored for adherence to your investment policy guidelines. The most important input to your portfolio selection will be your individual risk tolerance. Our CERTIFIED FINANCIAL PLANNERS will assist you & your family in determining the correct investment allocation. These investment solutions are screened and monitored on a daily basis. The Morgan Stanley Portfolio Management Platform will grant our Portfolio Managers the ability to make changes on a discretionary basis. The Durso Wealth Management Group believes more prudent attention and flexibility is required in today s fast paced and ever changing macroeconomic landscape. REVIEWS: Investment performance will be clearly stated on Morgan Stanley s Investment Monitor Reports. As an additional benefit, the team will provide each portfolio management relationship with a monthly insight letter. This letter will contain updates on the macroeconomic landscape, as well as our rationale on any investment allocation changes that were completed throughout the month. The returns will be compared to current and appropriate benchmarks. As stated before, these multi-asset solutions are long-term investment planning techniques. REBALANCING: A key component to the Portfolio Management Platform is its flexibility. We will continue to utilize Morgan Stanley s research & proprietary techniques utilized by our investment management committee to determine appropriate investment holdings. Due to the volatile nature of many asset classes, variances from the initial stated percentages are expected to change. These strategies are monitored on a daily basis by our Certified Portfolio Manager and will be re-allocated when our views of future market conditions change. PORTFOLIO TARGET ASSET ALLOCATION BALANCED GROWTH GLOBAL GROWTH ENHANCED INCOME EQUITY TARGET (%) 41% 65% 85% 17% FIXED INCOME TARGET (%) 42% 19% - 60% ALTERNATIVES TARGET (%) 17% 16% 15% 23%
BALANCED PORTFOLIO STRATEGY THE DURSO WEALTH MANAGEMENT GROUP AT MORGAN STANLEY INVESTMENT POLICY The Balanced Portfolio Strategy s primary objective is to strike a balance between capital appreciation and current income. Equal importance will be placed on both equity and fixed income selection. The portfolio management team will attempt to find the optimal blend of asset classes in order to grow capital over the long term, while maintaining a strong focus on capital preservation. STRATEGY FORMAT The Balanced Portfolio Strategy will primarily consist of Exchange Traded Funds. These vehicles will be used to gain access to select sectors of the equity and fixed income capital markets. The portfolio will also contain alternative asset classes with low correlations to stocks and bonds that seek to reduce portfolio volatility over longer investment time horizons. PORTFOLIO STRATEGY TEAM Lawrence Durso, CRPS - Managing Director, Wealth Management Matthew Sheridan, CFP, CPM - Portfolio Manager, Financial Advisor Roderick Mac Kenzie Portfolio Management Associate Portfolio Risks COMPOSITE PORTFOLIO ASSET ALLOCATIONS 9/30/16* TARGET ASSET ALLOCATION 17% 42% STRATEGY RISK** LOW 41% Equity Fixed Income Alternatives EQUITY WORLD REGIONS Americas: 70% Greater Europe: 14% Greater Asia: 16% EQUITY SECTOR ALLOCATION Energy: 6% Materials: 5% Industrials: 12% Consumer Discretionary: 10% Consumer Staples: 13% Healthcare: 14% Financials: 13% Information Technology: 14% Telecommunication: 4% Utilities: 5% Real Estate: 4% EQUITY STYLE Large Cap Value: 28% Large Cap Core: 26% Large Cap Growth: 22% Mid-Cap Value: 8% Mid-Cap Core: 6% Mid-Cap Growth: 5% Small-Cap Value: 2% Small-Cap Core: 2% Small-Cap Growth: 1% FIXED INCOME QUALITY AAA: 23% AA: 4% A: 15% BBB: 21% BB: 3% B: 3% Below B: 1% NR: 30% FIXED INCOME STYLE High Quality, Ltd Duration 2% High Quality, Mod Duration 5% High Quality, Ext Duration 2% Medium Quality, Ltd Duration 13% Medium Quality, Mod Duration 48% Medium Quality, Ext Duration 21% Low Quality, Ltd Duration 2% Low Quality, Mod Duration 5% Low Quality, Ext Duration 2% Investing in this strategy requires investors to be able to withstand moderate levels of volatility in the global markets. This portfolio strategy is appropriate for investors with a moderate tolerance for risk. The risk of investing in this strategy is loss of principal. HIGH CURRENT YIELD: 2.5%
GROWTH PORTFOLIO STRATEGY THE DURSO WEALTH MANAGEMENT GROUP AT MORGAN STANLEY INVESTMENT POLICY The Growth Portfolio Strategy s primary objective is long-term capital appreciation. Current income and reduced volatility will be secondary objectives. The portfolio management team will attempt to find a dynamic blend of asset classes across the global markets to help achieve these goals. The portfolio managers will rotate capital between specific sectors and styles of both the equity and fixed income markets that may offer higher growth potential. STRATEGY FORMAT The Growth Portfolio Strategy will primarily consist of Exchange Traded Funds. These vehicles will be used to gain access to select sectors of the equity and fixed income capital markets. The portfolio will also contain alternative asset classes with low correlations to stocks and bonds that seek to reduce portfolio volatility over longer investment time horizons. PORTFOLIO STRATEGY TEAM Lawrence Durso, CRPS - Managing Director, Wealth Management Matthew Sheridan, CFP, CPM - Portfolio Manager, Financial Advisor Roderick Mac Kenzie Portfolio Management Associate Portfolio Risks COMPOSITE PORTFOLIO ASSET ALLOCATIONS 9/30/16* TARGET ASSET ALLOCATION 19% 16% 65% STRATEGY RISK** LOW Equity Fixed Income Alternatives HIGH EQUITY WORLD REGIONS Americas: 69% Greater Europe: 15% Greater Asia: 16% EQUITY SECTOR ALLOCATION Energy: 6% Materials: 5% Industrials: 12% Consumer Discretionary: 11% Consumer Staples: 11% Healthcare: 15% Financials: 13% Information Technology: 15% Telecommunication: 4% Utilities: 4% Real Estate: 4% EQUITY STYLE Large Cap Value: 28% Large Cap Core: 26% Large Cap Growth: 22% Mid-Cap Value: 7% Mid-Cap Core: 7% Mid-Cap Growth: 5% Small-Cap Value: 2% Small-Cap Core: 2% Small-Cap Growth: 1% FIXED INCOME QUALITY AAA: 6% AA: 8% A: 18% BBB: 25% BB: 4% B: 4% Below B: 1% NR: 34% FIXED INCOME STYLE High Quality, Ltd Duration 4% High Quality, Mod Duration 12% High Quality, Ext Duration 4% Medium Quality, Ltd Duration 6% Medium Quality, Mod Duration 45% Medium Quality, Ext Duration 14% Low Quality, Ltd Duration 2% Low Quality, Mod Duration 3% Low Quality, Ext Duration 10% CURRENT YIELD 2.5% Investing in this strategy requires investors to be able to withstand above average levels of volatility in the global markets. This portfolio strategy is appropriate for investors with a moderately aggressive tolerance for risk. The risk of investing in this strategy is loss of principal.
GLOBAL GROWTH PORTFOLIO STRATEGY THE DURSO WEALTH MANAGEMENT GROUP AT MORGAN STANLEY INVESTMENT POLICY The Global Growth Portfolio Strategy s primary objective is capital appreciation. Long-term growth of capital is the driving force behind security selection. The portfolio management team will attempt to find the optimum blend of equity and alternative investments to achieve this goal. The portfolio managers will continue to shift capital between global investment allocations to take advantage of specific market sectors and styles as opportunities arise. STRATEGY FORMAT The Global Growth Portfolio Strategy will primarily consist of Exchange Traded Funds. These vehicles will be used to gain access to select sectors of the equity and alternative investment capital markets. The portfolio will also contain alternative asset classes with low correlations to stocks that seek to reduce portfolio volatility over longer investment time horizons. PORTFOLIO STRATEGY TEAM* Lawrence Durso, CRPS - Managing Director, Wealth Management Matthew Sheridan, CFP, CPM - Portfolio Manager, Financial Advisor Roderick Mac Kenzie Portfolio Management Associate Portfolio Risks COMPOSITE PORTFOLIO ASSET ALLOCATIONS 9/30/16* TARGET ASSET ALLOCATION 15% 85% STRATEGY RISK** LOW Equity Alternatives HIGH EQUITY SECTOR ALLOCATION Energy: 7% Materials: 5% Industrials: 11% Consumer Discretionary: 11% Consumer Staples: 11% Healthcare: 15% Financials: 13% Information Technology: 15% Telecommunication: 4% Utilities: 4% Real Estate: 4% EQUITY WORLD REGIONS Americas: 69% Greater Europe: 15% Greater Asia: 16% EQUITY MARKET MATURITY Developed Markets: 94% Emerging Markets: 6% EQUITY STYLE Large Cap Value: 28% Large Cap Core: 25% Large Cap Growth: 22% Mid-Cap Value: 7% Mid-Cap Core: 6% Mid-Cap Growth: 5% Small-Cap Value: 3% Small-Cap Core: 2% Small-Cap Growth: 2% EQUITY TYPE High Yield: 8% Distressed: 2% Hard Asset: 10% Cyclical: 35% Slow Growth: 23% Classic Growth: 8% Aggressive Growth: 8% Speculative Growth: 2% Not Classified: 4% CURRENT YIELD 2.0% Investing in this strategy requires investors to be able to withstand high levels of volatility in the global markets. This portfolio strategy is appropriate for investors with an aggressive tolerance for risk. The risk of investing in this strategy is loss of principal.
ENHANCED INCOME PORTFOLIO STRATEGY THE DURSO WEALTH MANAGEMENT GROUP AT MORGAN STANLEY INVESTMENT POLICY The Enhanced Income Strategy s primary objective is to achieve a high level of current income. High importance will be placed developing income streams that outpace the rate of inflation over the long-term. Less importance will be placed on short-term preservation of capital. The portfolio management team will attempt to find the optimal blend of asset classes in order achieve these goals. STRATEGY FORMAT The Enhanced Income Portfolio Strategy will primarily consist of Exchange Traded Funds & Closed-End Funds. These vehicles will be used to gain access to select sectors of the equity and fixed income capital markets. The portfolio will also contain alternative asset classes with low correlations to stocks and bonds that seek to reduce portfolio volatility over longer investment time horizons. PORTFOLIO STRATEGY TEAM Lawrence Durso, CRPS - Managing Director, Wealth Management Matthew Sheridan, CFP, CPM - Portfolio Manager, Financial Advisor Roderick Mac Kenzie Portfolio Management Associate Portfolio Risks COMPOSITE PORTFOLIO ASSET ALLOCATIONS 9/30/16* TARGET ASSET ALLOCATION 23% 17% 60% STRATEGY RISK** LOW Equity Fixed Income Alternatives HIGH EQUITY WORLD REGIONS Americas: 76% Greater Europe: 16% Greater Asia: 8% EQUITY SECTOR ALLOCATION Energy: 9% Materials: 3% Industrials: 8% Consumer Discretionary: 11% Consumer Staples: 12% Healthcare: 12% Financials: 15% Information Technology: 16% Telecommunication: 7% Utilities: 5% Real Estate: 2% EQUITY STYLE Large Cap Value: 33% Large Cap Core: 29% Large Cap Growth: 26% Mid-Cap Value: 5% Mid-Cap Core: 3% Mid-Cap Growth: 3% Small-Cap Value: 0% Small-Cap Core: 1% Small-Cap Growth: 0% FIXED INCOME QUALITY AAA: 6% AA: 6% A: 21% BBB: 24% BB: 8% B: 6% Below B: 2% NR: 27% FIXED INCOME STYLE High Quality, Ltd Duration 2% High Quality, Mod Duration 4% High Quality, Ext Duration 2% Medium Quality, Ltd Duration 12% Medium Quality, Mod Duration 31% Medium Quality, Ext Duration 23% Low Quality, Ltd Duration 7% Low Quality, Mod Duration 12% Low Quality, Ext Duration 7% CURRENT YIELD 5.0% Investing in this strategy requires investors to be able to withstand high levels of volatility in the global markets. This portfolio strategy is appropriate for investors with an aggressive tolerance for risk. The risk of investing in this strategy is loss of principal.
THE DURSO WEALTH MANAGEMENT GROUP Portfolio Management Tools
Portfolio Management Program Disclosures This material is intended only for clients and prospective clients of the Portfolio Management program. It has been prepared solely for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument, or to participate in any trading strategy. The individuals mentioned as the Portfolio Management Team are Financial Advisors with Morgan Stanley participating in the Morgan Stanley Portfolio Management program. The Portfolio Management program is an investment advisory program in which the client s Financial Advisor invests the client s assets on a discretionary basis in a range of securities. The Portfolio Management program is described in the applicable Morgan Stanley ADV Part 2, available at www.morganstanley.com/adv or from your Financial Advisor. Past performance of any security is not a guarantee of future performance. There is no guarantee that this investment strategy will work under all market conditions. Holdings are subject to change daily, so any securities discussed in this profile may or may not be included in your account if you invest in this investment strategy. Do not assume that any holdings mentioned were, or will be, profitable. The performance, holdings, sector weightings, portfolio traits and other data for an actual account may differ from that in this material due to various factors including the size of an account, cash flows within an account, and restrictions on an account. Top holdings, sector allocation, portfolio statistics and credit quality are based on the recommended portfolio for new investors as of the date specified. Holdings lists indicate the largest security holdings by allocation weight as of the specified date. Other data in this material is believed to be accurate as of the date this material was prepared unless stated otherwise. Data in this material may be calculated by Morgan Stanley or by third party providers licensed by the Financial Advisors or Morgan Stanley. Material in this presentation has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy, completeness or timeliness. Third party data providers make no warranties or representations relating to the accuracy, completeness or timeliness of the data they provide and are not liable for any damages relating to this data. Morgan Stanley Wealth Management has no obligation to notify you when information in this presentation changes.
Investors should carefully consider the investment objectives and risks as well as charges and expenses of mutual funds and exchange traded funds (ETFs) before investing. To obtain a prospectus, contact your Financial Advisor or visit the fund company s website. The prospectus contains this and other important information about the mutual funds and ETFs. Read the prospectus carefully before investing. International investing may not be suitable for every investor and is subject to additional risks, including currency fluctuations, political factors, withholding, lack of liquidity, the absence of adequate financial information, and exchange control restrictions impacting foreign issuers. These risks may be magnified in emerging markets. Morgan Stanley Smith Barney LLC ( Morgan Stanley ), its affiliates and Morgan Stanley Financial Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. Bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally the longer a bond's maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which is the risk that the issuer will redeem the debt at its option, fully or partially, before the scheduled maturity date. The market value of debt instruments may fluctuate, and proceeds from sales prior to maturity may be more or less than the amount originally invested or the maturity value due to changes in market conditions or changes in the credit quality of the issuer. Bonds are subject to the credit risk of the issuer. This is the risk that the issuer might be unable to make interest and/or principal payments on a timely basis. Bonds are also subject to reinvestment risk, which is the risk that principal and/or interest payments from a given investment may be reinvested at a lower interest rate. Bonds rated below investment grade may have speculative characteristics and present significant risks beyond those of other securities, including greater credit risk and price volatility in the secondary market. Investors should be careful to consider these risks alongside their individual circumstances, objectives and risk tolerance before investing in high-yield bonds. High yield bonds should comprise only a limited portion of a balanced portfolio. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be suitable for all clients. Any product discussed herein may be purchased only after a client has carefully reviewed the offering memorandum and executed the subscription documents. Morgan Stanley Wealth Management has not considered the actual or desired investment objectives, goals, strategies, guidelines, or factual circumstances of any investor in any fund(s). Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase the volatility and risk of loss. Alternative Investments typically have higher fees than traditional investments. Investors should carefully review and consider potential risks before investing. Past performance is no guarantee of future results. Actual results may vary. Diversification does not assure a profit or protect against loss in a declining market. Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributing important tax information. Individual funds have specific risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice. Interests in alternative investment products are offered pursuant to the terms of the applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain of its affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley or any of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. Investments and services offered through Morgan Stanley Smith Barney LLC. Member SIPC CRC 1536581