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Schwab Managed Retirement Trust FundsTM

Low-cost collective trust funds with non-proprietary sub-advisors Webelievehavingtargetretirementfundsinaretirementplan'sinvestmentline-upcanbeagreat way to help participants to and through retirement because of their ease of use, diversification and ready-made asset allocation. Participants can make simple, informed decisions about when they want to retire and leave the details to professional investment managers.

What they are

The Schwab Managed Retirement Trust Funds1 (SMRT Funds) are collective trust funds managed by Charles Schwab Trust Company (CSTC), a division of Charles Schwab Bank, that are tied to target retirement dates 2010­2050 in five-year increments. Each Fund utilizes both active and passive management strategies and is a comprehensive portfolio that: ·Issub-advisedbynon-proprietaryinvestmentmanagers ·Isdiversifiedacrossassetclasses ·Alignsassetallocationwithemployees'retirementtimehorizons,becomingmoreconservative over time ·Keepscostslowforplansponsorsandparticipantsthroughacollectivetrustfundstructure There'salsoaretirementincomefundwithaninvestmentoptiontoprovideforanincomestreamfor individuals in retirement.2

Low cost options

By offering four unit classes, the Funds provide flexibility and value to retirement plans. The Funds, the majority of which have no minimum balance requirements, with all-in operating expense ratios of: ·0.45%(ClassIV)* ·0.54%(ClassIII) ·0.69%(ClassII) ·0.89%(ClassI)

Open-architecture investment philosophy

Each SMRT Fund is a comprehensive portfolio diversified across asset classes and supported by relationships with independent sub-advisory firms. This open-architecture approach enables CSTC to manage the Funds using investment advice from industry-leading sub-advisors in each asset class, unlike other target-date retirement funds that are restricted to single investment firms forentireportfolios.Asub-advisedapproachalsoallowsindividualinvestorstogainaccess to the investment strategies of professional investment managers usually reserved for larger, institutional investors.

*MinimumretirementplanbalancerequirementsapplyforinvestmentinSMRTFundsClassIV.

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How we select and evaluate the sub-advisors

Our investment sub-advisor selection includes a rigorous screening process and an ongoing quarterly reviewofsub-advisorperformancebyCSTC'sInvestmentCommittee.Sub-advisorsarereleasedand replaced if they are not meeting expectations, including conformity with fund investment guidelines and strategies and applicable laws and regulations. Sub-advisors include: ·AberdeenAssetManagement ·AmericanCenturyInvestments ·AmericanFunds ·DimensionalFundAdvisors ·Dodge&Cox ·DwightAssetManagement ·FranklinTempletonInvestments ·Loomis,Sayles&Company ·MellonCapitalManagement ·PictetAssetManagement ·PIMCO ·StateStreetGlobalAdvisors ·TurnerInvestmentPartners ·TheVanguardGroup ·WellingtonManagement

How the Funds work

Theportfoliosbecomeprogressivelymoreconservativeasthetargetdatesapproach,reaching40% equityand60%fixedincomeallocationsatthetargetdates.TheFundscontinuetobecomemore conservative for 20 years beyondthetargetretirementdates.Oncetheyreach25%equityand75% fixedincomeallocations,theallocationsnolongerchange.Atthattime,thetarget-dateFundswill mergewiththeSMRTIncomeFund.TheSMRTFunds'glidepathisshownbelow.

Allocation Schedule

100% 90%

Stable Value International Equity

80%

70%

60%

Core-Plus Bond

50%

40%

Domestic Equity

30%

20%

10%

0% 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 -22 -24

Y E A R S TO R E T I R E M E N T

Y E A R S PA S T R E T I R E M E N T

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The portfolios provide participants easy, turn-key solutions for retirement investing: ·AparticipantdetermineshisorherretirementdateandchoosestheappropriateFund. ·Schwaboverseesportfoliosdesignedtotakeparticipantstoandthroughretirement. ·Portfoliosautomaticallyadjusttobecomemoreconservativelyinvestedovertime.

Low-cost collective trusts

We chose to construct the SMRT Funds as collective trusts rather than as registered mutual funds because they offer: ·Lower, more competitive:Acollectivetrustfundisnotencumberedbyadditionalcostsassociated withregisteringthefundundertheInvestmentCompanyActof1940.Thisallowsustoofferthe Funds at lower, more competitive prices. ·Consistent cash flows: Because collective trust funds are available only to the institutional market, they offer more predictable and consistent cash flows that are associated with retirement plan contributionsanddistributions.Thisallowsustokeeptheportfolios'cashallocationslower, providing better return potential for participants. ·Stable value investment option: The collective trust fund structure allows us to incorporate a stable valuefundintotheSMRTFunds'assetallocationmodel.Thestablevalueassetcategory,combined withacorebondoption,offersmorefavorablerisk/returnmetricsthanacorebondoptionalone.It also offers historically higher yields than a money market fund.

How the Funds benefit retirement plans

TheSMRTFundscancomplementaretirementplan'sexistingcorefundsnicely.Theyprovidesolid, easily understood investment options for participants who may not be candidates for active portfolio management or other plan services. The Funds can also help to satisfy fiduciary requirements by providing a more complete suite of retirement products.

How the Funds benefit participants

With just one simple, informed decision to invest in the Funds, participant investments can be diversified,andwithannualportfoliorebalancingwithintheFunds,theywon'thavetomakeany ongoing asset allocation adjustments on their own. TheFundsprovideparticipantswithlow-costinvestmentoptionsandaccesstosomeoftheindustry's leading investment advisors.

Contact us

Ifyou'dlikemoreinformation,contactyourSchwabrepresentative,call1-800-579-1636, email [email protected] or visit cstcfunds.com.

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1

The Schwab Managed Retirement Trust FundsTM (the "Funds") are collective trust funds managed and distributed by Charles Schwab Trust Company ("CSTC"), a division of Charles Schwab Bank. CSTC acts as trustee, manager, and distributor of the Funds. The Funds are not mutual funds and units of the Funds are not registered under the SecuritiesActof1933,asamended,orapplicablesecuritieslawsofanystateorotherjurisdiction.TheFundsarenotregisteredundertheInvestmentCompanyActof1940, asamended,orotherapplicablelaw,andunitholdersarenotentitledtotheprotectionsofthe1940Act.TheFundsarenotinsuredbyCSTC,anyofitsaffiliates,theFDICor anyothertypeofdepositinsurance.AsdefinedintheFunds'DeclarationofTrustandParticipationAgreementdocuments,theFundsareavailableforinvestmentbyeligible, qualified retirement plan trusts only. The unit value of the Funds will fluctuate, and investors may lose money. Subject to the terms of the retirement plan, as applicable. The Charles Schwab Corporation (Charles Schwab) provides services to retirement and other benefit plans and participants through its separate but affiliated companies andsubsidiaries,SchwabRetirementPlanServices,Inc.;The401(k)Companies,Inc.anditssubsidiaries;CharlesSchwabTrustCompany,adivisionoftheCharlesSchwab Bank;andCharlesSchwab&Co.,Inc.(MemberSIPC).CharlesSchwabalsoprovidesequitycompensationplanservicesandotherfinancialandretirementservicesto corporationsandexecutivesthroughCharlesSchwab&Co.,Inc. ©2008CharlesSchwabBank.Allrightsreserved. IAN(0608-3473)SLS24738-12(06/08)

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