Target Trust Default Fact Sheet
The following information regarding the Alaska Supplemental Annuity Plan (SBS-AP) default investment option pertains to plan participants who first began participating in the SBS-AP July 1, 2009, or after. As part of the Plan, you will be automatically enrolled into a target trust (Trust) option based on your birth date on your first payroll period.
- Investment objective
- Management and strategy
- How the Trust works
- Investor profile
- Cancellation at any time
- Other investment options
To provide exposure to a diversified mix of stocks, bonds and cash or money market securities for long-term investors and/or investors with a moderate to high tolerance for risk. The Trust is designed to gradually invest more conservatively, with an emphasis on capital preservation, as the target date approaches.
Management and Strategy
The Trust is managed by T. Rowe Price Trust Company, a subsidiary of T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc., founded in 1937, is a global investment management organization. The T. Rowe Price family of companies has more than $269 billion as of March 31, 2009 in assets under management.
The Trust is designed to provide investors with a simple way to have exposure to a diversified portfolio, which gradually becomes more conservative as the target date is reached. Professional money managers shift assets gradually between asset classes and can overweight or underweight particular asset classes to help take advantage of market conditions. Also, since these asset classes respond to different market forces, one asset class doing poorly may be offset by another class doing well. The Trust’s assets are spread across and within asset classes. Investments by the underlying trusts may include U.S. and non-U.S. stocks, small- and large cap stocks, and investment-grade bonds and money market securities. As with any investment, the market value of this Trust may go up and down over time. Investors should be prepared to accept year-to-year changes in returns, including declining portfolio are subject to market risk or falling share prices; the bond and money market portions will be affected by interest rate and credit risk. Historical returns, however, demonstrate that a long-term investment across varying asset classes may help to provide protection against below-average returns in one class while potentially providing income and capital appreciation from other classes.
For more detailed information about a particular target date trust fund, please see the investment options information.
How the Trust Works
The Trust invests in four underlying common trust funds, each one emphasizing a different market sector: U.S. stocks, non-U.S. stocks, U.S. investment-grade bonds, and money market securities. Over time, the allocations become more conservative, systematically decreasing exposure to stocks and increasing exposure to bonds and money market securities on a quarterly basis. At the target date, the Trust maintains a substantial exposure to stocks (approximately 55%). The most conservative allocation to stocks (approximately 20%) occurs 30 years after the target date is reached.
The Trust may be appropriate for individuals who will retire around the target date and/or investors with a higher tolerance for risk.
The benchmark for the Trust is a weighted average of the total return performance of the Russell 3000 Index, MSCI EAFE Index, Barclays Capital U.S. Aggregate Bond Index, and the Citigroup 3-Month Treasury Bill2 Index. The weights depend on the current neutral allocation to each underlying trust.
With the exception of the standard fund management and administrative fees that pertain to all the investment options provided by the Plan, there are no additional fees for the target date trust funds.
Cancellation at Any Time
If you do not want to be enrolled in an age-based target fund, you may opt out of the default at any time.
Other Investment Options
The plan offers differing levels of financial advice services provided by Reality Investing Advisory Services which are more tailored to the individual. With Reality Investing, you enjoy three levels of service from which to choose. You can:
- have your investment professionally managed for you by managers who will take into account your other assets and your unique retirement goals;
- receive guidance to help you manage your account by providing personalized asset allocations and savings rate recommendations; or
- manage your account yourself by creating your own portfolio from other fund options available in the Plan using free tools and resources to help you make welleducated investment decisions.
Please consider the investment objectives, risks, fees and expenses of the different options carefully before investing.