Speaker: Hello, my name is (name) and I am a (title) at (Company) . During this presentation we would like to cover the benefits of the 401(k) Retirement Savings Plan offered by Everett Charles Technologies and discuss the current market environment and why diversification is so important when it comes to investing. (Briefly review agenda items) If you have any questions, please raise your hand at any time. So, unless anyone has any comments, let’s get started.
This chart answers the first question - and perhaps the best way to describe our current credit and economic crisis is to view it as “the perfect storm.” Here’s what we mean…looking at this chart, we see that the housing crisis led to the financial crisis which in turn caused the liquidity crisis. The result? As of October 2008, there was a staggering loss of $1.9 trillion in investors’ retirement savings…but as you can see, the financial system collapsed not because of one specific factor, but from this multiple cause and effect reaction. Now let’s start by looking at the first section on the chart - The Housing Crisis . The housing crisis began out of two main factors - an increasing supply of housing inventory and the issue of a large amount of mortgages across the country (called “sub-prime” mortgages) to people who were not necessarily in a financial position to pay them back. In short, people whom in the past would not qualify for mortgages now could. Traditionally, the housing market could be seen as a relatively stable investment for both homeowners and investors - with many banks issuing securities as investments based on the value of mortgage obligations. But then the economy slowed, inflation went up, unemployment increased and mortgage rates reset at higher percentage points. Some mortgage holders found they could no longer afford their payments and bank issued mortgages began to default at a much larger rate than anticipated. In addition, housing supply began to outpace housing demand and home prices began to decline. During the period of 2006 to 2008, the average homeowner saw median home prices drop 12%.* Now…let’s move to the second section of the chart - The Financial Crisis : Many banks had already packaged these mortgages into investments called mortgaged backed securities which were in turn sold to the public by investment banks. The value of these securities was directly tied to the sub-prime mortgage obligations that began to default – significantly impacting the value of these investments. New accounting rules required investments where there is no market value to declare a value of zero. This is known as “mark to market” or “book to market” accounting. Many leading investment banks were left with these securities on their corporate balance sheets that no longer had value. As a result, a number of leading investment banks could not support the debt of these securities and failed. These banks were once seen as the leaders of their industry, with their failure, the banking industry entered into a severe crisis. The public reacted by pulling their money out of their bank accounts because of lack of confidence in the banking system - with the remaining banks left to lose billions in assets, as well as “write-down” losses from failed investments. Finally - let’s look at the last section of the chart - the Liquidity Crisis . As the financial crisis unfolded, banks began to drastically cut back on their lending to each other and their customers. Because banks had never before stopped lending to one another and raised their rates to unprecedented levels to do so, a credit crisis spread throughout the globe; stock markets tumbled; investor confidence plummeted. Put this all together and you have the “Perfect Storm” in which most of us saw a lot of our retirement savings severely decline. *Source: NY Times from Reuters/University of Michigan, Bureau of Labor Statistics; National Association of Realtors, all via Haver Analytics. Year-over-year percentage change in median price of existing homes, adjusted for inflation.
Now that we’ve taken a look at the factors that contributed to the storm, let’s take a look at the damage it created. Leading financial services companies have disappeared, including Lehman Brothers, Merrill Lynch and Bear Stearns. 2. Consumer confidence has severely declined at home and abroad. 3. We’re experiencing extreme stock market volatility. The $700 billion bailout by the Federal Reserve and the US Treasury is being financed by you, me and all American taxpayers. All of these factors together clearly indicate a difficult economic cycle…which leads us to a crucial question, how can we best manage our retirement savings in this economically challenging environment?
The events of recent weeks have changed the landscape of the financial industry in the US and around the world. We realize the volatile markets can be stressful even for the most seasoned investors and financial professionals. Look to DWS Investments as a resource you can turn to during these turbulent times. Deutsche Bank, parent company to DWS Investments, has a globally diverse group of businesses and is considered a leader in today’s challenging marketplace. You can rely on our commitment, determination, global vision and resources to support you during this unprecedented time. These resources include: Intelligence: DWS Investments remains focused, disciplined and globally diversified DWS Investments brings you direct access to the vast intellectual capital supporting Deutsche Bank’s investment platform. This means that through our investment platform, you can connect with the vast intellectual capital supporting Deutsche Bank's broad-based portfolio of businesses. Perspective: At DWS Investments, we have the capabilities to closely monitor market movements around the clock and around the world. We access a network of more than 900 investment professionals in 16 countries as of December 31, 2008. Risk management has long been firmly embedded in the Bank's value system and DNA DWS Investments continually works to identify the potential impact of market volatility on your investments Access: Proprietary insights and research provide timely and reliable perspectives on the economy, investment strategies and commentary and the political landscape You can see why in these turbulent times, you can feel confident in our determination, global vision and resources to help you succeed.
The strength and stability of DWS Investments and the protection provided to your retirement plan is designed to help you feel more secure about the future. Now let’s address important time-tested strategies you can use to gain perspective and stay calm during this, or any other, volatile market period. Over time, these strategies have been proven to be the best way to stay protected during times of significant market fluctuations. These strategies may be familiar to some of you - however many investors find it is beneficial to revisit these concepts in times of market crisis. Stay focused . Look back at how stock markets have acted in the past. As we all know, past performance does not indicate future results, but it can provide important perspective. Stay invested . Do not panic, sell off your stock funds or try to time the market, which I’ll describe in a bit. Many people benefit by working with their financial advisor to assess their long-term investing strategy during volatile periods. Stay prepared . Understand and put into action strategies to help prepare for a market downturn and then regularly review these strategies. Stay informed . Connect with your financial advisor or talk to an Employee Service Center representative about your needs and concerns; when a market correction occurs you don’t have to go it alone. With these strategies in mind, let’s take a look at the benefits offered in the Everett Charles Technologies 401(k) Retirement Savings Plan
First, let’s take a minute to review a high level review of your Plan features: Automatic Enrollment – Unless you affirmatively elect either a different percentage or elect not to make a salary deferral election, a fter you complete 1 month of service, you will have 4% of your pay each payroll deferred into the Plan. Elections are automatically increased each year by 1% until your salary deferred reached 12%. Contributions - Most employees can contribute from 1% to 99% of their eligible compensation. Highly compensated employees (HCEs) are limited to contributing 12% in 2009. Contributions can be made on a pre-tax basis only. Contributions can be made up to the IRS limits. A description of each of the limits can be found below. IRS limits 2009 Amount 401(k) pre-tax contribution limit $16,500 Compensation limit on contribution $245,000 and benefit determinations 415(c) limit $49,000 Catch-up contributions $5,500 Employees who are or will be age 50 or over in 2009 can contribute an additional $5,500 above and beyond the regular tax and plan limits (as referenced above). These are known as catch-up contributions. Please be aware that if you have or are currently making a catch-up contributions, you must elect a new catch-up contribution each year.
Let’s take a minute to review some of your other Plan features: ( Read off of the slide above. When talking about the Plan loans and withdrawals, please be sure to mention the negatives of withdrawals, like taxation, reduction in saving, etc. ) Also mention – Vesting years are measured using your plan year. Employees must complete 1,000 hours to receive credit for one year of vesting service.
Speaker: Today, your priorities may focus on your family, health, and home. But, retirement planning is another priority you need to think about today, so that you can make appropriate decisions to help you lead the life you want later. Saving for your retirement future can be easy as 1, 2, 3. Three basic steps can help lead you to a retirement future the way you want it: 1. Set goals. Decide what you want out of retirement. 2. Create a plan. Take steps to meet your goals. 3. Invest for retirement. Make and manage retirement investments to support your goals. Along with these steps for successful retirement planning, you will learn the important benefits and opportunities your retirement plan provides for you throughout the course of this workshop. They could make a difference in the quality of your life during retirement.
Speaker: Setting and achieving goals is probably something you’re already familiar with. Well, it’s also important when planning for retirement. Setting goals now–wherever you are in your life–is the first step to planning for a comfortable future.
Speaker: Inflation is defined as the rise in the costs of goods and services, and it can cause some serious damage to the purchasing power of your retirement investments. That is why it is important to consider investments that have the best chance of keeping pace with inflation. Inflation constantly erodes the buying power of your money, so it’s crucial for your investment return to have the potential to beat inflation and not just keep pace with it. Since the cost of living will inevitably continue to rise, your investment portfolio must stay ahead of that curve.
Speaker: We’ve defined the first step to retirement planning, now it’s time to create a plan of action. You need to think about your time horizon, retirement lifestyle and how much money you will need to live that lifestyle. To that end, you need to understand where your money will come from once you retire. This chart represents a hypothetical breakdown of sources of retirement income. Keep in mind, the future of Social Security is uncertain. These numbers may be very different when you retire, which is why it’s vital to start investing in your future today!
Speaker: The earlier you start planning, the more money you’ll potentially accumulate over time. In this example, Michelle joins her employer’s retirement plan at age 24, contributes $100 a month for 10 years and then never invests another dollar. Joe joins his plan at age 35. He also contributes $100 a month, but up until age 65. And, if Michelle had continued her $100 monthly contribution level, and earned 8% compounded annually until she was 65 -- she would have amassed $351,366. REMEMBER, IT’S NEVER TOO EARLY TO START AND IT’S NEVER TOO LATE TO CONTRIBUTE.
Speaker: Now, its time to focus on the third step – invest for retirement. Want to pay less in taxes? Well, you can by investing in the plan. Since the money you put into the plan can be taken out of your pay before taxes are deducted, you may pay taxes on a smaller amount of money. By contributing to your employer’s retirement plan or an IRA, you may have the chance to take a tax credit. Your saver’s credit is based on your contribution rate and credit rate, which can range from 10% up to 50%, depending on your income and filing status with the Internal Revenue System 1 . For more information about the saver’s credit, you can log onto the IRS web site at www.irs.gov or call them toll free at 1-800-829-1040. Source: Internal Revenue Service, www.irs.gov
Speaker: As this chart shows, you could really benefit from pretax savings. By contributing money to your employer’s tax-deferred retirement plan, you’re reducing your total taxable income, allowing you to keep more of what you earn because you do not pay current taxes on earnings, if any, until withdrawn. And, the potential long term gains by participating in a tax-deferred retirement plan are far greater than participating in a taxable retirement plan. Has anyone ever heard of tax-deferred compounding? Well, it can be your best friend. Here’s how it works: When your investments earn interest, dividends, or capital gains, this is called a return . These returns are automatically added to your account, which results in a larger balance, with the potential to earn even larger returns. This is called compounding . When your employer puts money in a qualified retirement plan, the government will not tax you until you withdraw the funds, usually at retirement, so more of your money can keep growing. This is the considerable advantage of tax deferred compounding. Over time, the benefits of tax-deferred compounding can be significant. You may think that you have plenty of time to start saving for retirement. But, because of the way compounding works, the longer you wait, the more it could cost you.
Speaker: Understanding tax-deferred savings is not the only important element to invest for retirement, so is understanding mutual funds. A mutual fund is money pooled from investors who have a common or mutual objective. The money is then given to a professional investment team, led by a portfolio manager, who manage the money in order to reach the fund’s respective objective. It is the portfolio manager’s job to select the right investments for his/her fund. By investing your retirement savings in a mutual fund, you also benefit from immediate diversification. Does anyone have an idea of what diversification is? (You can spend a minute having people respond to this.) Diversification is the financial term for putting money into various types of investments. It’s designed to benefit the fund’s investors. For example, the average fund is composed of many individual investments. When one investment is down, it’s possible that another may be up. Diversification does not eliminate the risk of potential loss or guarantee a gain.
Speaker: Diversification among different types of investments has the potential to greatly benefit you, as you can see. This chart compares the average annual total returns of stocks, bonds, cash and inflation over the past 5 years, 10 years-, and 20-year period and since 1926. Diversification does not eliminate the risk of potential loss. Past performance is not a guarantee of future results.
This chart demonstrates that long-term investors have been rewarded despite short-term ups-and-downs. Additionally, the chart assumes growth in today’s dollars and does not account for inflation. Does this make sense to everyone? (Take a minute or two for responses.) Staying focused also means understanding that it’s natural for stock markets to move in cycles. At DWS Investments, we’ve endured bear markets before just as we’ve experienced many bull markets. By the way, a bear market refers to a prolonged period when the stock market declines by 20% or more. Bear markets usually occur when the economy is in a recession and unemployment is high or when inflation is rising rapidly. Let me explain this a bit more.
This chart shows the history of significant bear markets in the past century. Within this chart is information on each bear market cycle, including its length, percentage downturn, and timeframes for investment return. Overall, the average bear market lasts for less than 1.5 years, with the market dropping by 33% over that time. Does this mean we are likely to rebound soon from the bear market that began in October 2007? Unfortunately, no one knows for sure. But one thing is clear, you can gain perspective, and a deeper understanding of how market cycles work, by looking at what’s happened in the past.
Speaker: The investment options in your employer’s retirement plan may include these three asset classes. Each of these classes carries potential risks and rewards. The higher the risk, the higher the reward potential. The benefits of stable value investments: Seek to maintain a stable share price and are designed to help protect your original investment. Risks of stable value investments: Stable value investments don’t offer the income potential of bond funds or the growth potential of stocks funds. An investment in a stable value product seek to maintain a a constant net asset value of $1.00 per share, but there can be no assurance that the stable net asset value will be maintained. It is possible to lose money. Investments in these funds are neither insured nor guaranteed by the US government. Benefits of bond funds: Generally, bond funds offer greater income potential than stable value products and not as much risk as stock funds. Risks of bond funds: Bond funds typically don’t offer the growth potential of stocks funds. And bond funds are riskier than stable value funds. For example, an increase in interest rates can cause the value of an existing bond fund to fall. If you sell your bond fund, it may be worth less than the original price. Stocks: Stocks also are commonly referred to as equities. For example, if you own shares of Home Depot, you become part owner of the company. So the company’s performance may affect you as a shareowner. Benefit of investing in stocks funds: Historically, stocks have provided larger long-term gains than any other asset class. But remember, past performance is not a guarantee of future returns. Risks of investing in stock funds: The value of the stock can go down over periods of time. As a result, there is greater risk to your retirement savings, including your principal, compared to other assets. Stock funds are subject to the risk that individual stocks in the fund may decline in value for extended period of times due to the activities and financial prospects of individual companies, or due to the general market and economic conditions.
Speaker: Now that you have a better understanding of the different asset classes, the next step is to determine which asset allocation is right for you. Asset allocation is how and where you choose to invest your dollars. Depending on what kind of investor you consider yourself to be, we illustrate some typical models on the following slide that may help you choose your strategy. People decide how to invest based on their lifestyle, personality, risk tolerance, family issues, and other financial considerations. You should take all of these factors into consideration when determining your asset allocation. Now, lets take a few minutes to review the following asset allocations.
Speaker: Build a portfolio that meets your needs. Here are some sample portfolio models. Conservative - A portfolio mainly in conservative instruments can help protect what you’ve accumulated through the years and can potentially provide investment income. But also allocating a portion to stocks may help guard against the risk of inflation, which can erode purchasing power over time. Moderate - Stocks could still be the primary investment since you may have the time to deal with any volatility that may occur, while allowing for potential capital growth. Bonds and money market instruments would also be an important part of this allocation because they can help preserve your investments while also possibly reducing some of the risk associated with stock. Aggressive - you may be willing to take on more risk in search of the best gains possible. A longer time horizon can potentially allow you to ride out any short-term price fluctuations. Remember, though, that you may want to modify your allocation as you get closer to the time you will need to access your money. The portfolios range from conservative to aggressive. You may want to use these as a guideline for making your own investment decisions. Keep in mind, however, that these sample portfolios are guidelines and should not be construed as recommendations. It’s important, of course, to review all of the fund information, prospectuses, underlying holdings, Summary Plan Document (SPD), the enrollment booklet, and any other materials you were given before you decide how you want to allocate your contributions. But remember, as we already discussed, you can change your allocations at any time.
Most retirement investors believe that diversification is key to a successful investment strategy. For many, however, selecting the right funds—and monitoring those funds over time—can prove to be challenging. The Plan provides a few approaches when selecting investments that are right for you. There are two ways to create a retirement plan portfolio - an automatic approach and manual approach. The automatic approach consists of investing in one of the age /retirement date based T. Rowe Price Retirement Date Funds. The manual approach consists of mixing your own portfolio using the remaining 15 investment options offered in the Plan. Let’s look at each approach in more detail: First – the T. Rowe Price Retirement Date Funds are target date funds or asset allocation funds that can be a solution to the investor confusion challenge. Some key points about this type of investment vehicle include: They are highly diversified. Therefore, there may be no need for you to choose multiple investment funds. With the target date options, diversification can be automatic. These funds are designed to help you meet your changing financial needs up to and throughout retirement. You won’t need to worry about changing your investment strategy as your time to retirement draws closer. The funds are rebalanced by the portfolio manager periodically. The funds are professionally managed for each stage of retirement planning. During your savings years, the funds have a more aggressive asset allocation, to take advantage of the power of time to help you build your account balance. As you approach retirement, the portfolio manager automatically adjusts the funds’ investment allocations in an effort to provide greater stability and reduced investment risk. Now let’s review the “manual” approach to investing. This is not really a new approach, it is just a different way of referring to the existing investment options in the Plan. With this approach, you build your own portfolio from the “core” investments in your retirement plan account. You should also monitor your investment selections and adjust your asset allocation when your circumstances change. In addition, you should rebalance your portfolio when appropriate, to ensure that your investments stay in line with your original asset allocation targets. One important point you should keep in mind as you evaluate the “automatic” and “manual” approach to investing – generally, it is best if you do not combine an asset allocation/target date fund with other investments. Doing so may complicate what is meant to be a truly diversified portfolio. If you combine an asset allocation/target date fund with other investments, your assets may overlap because the same security or the same type of security could be part of multiple funds.
If you are not comfortable choosing a mix of individual funds, consider the Automatic solution. This category is made up of the six T. Rowe Price Retirement Date Funds (listed above). The goal of each Retirement Date Fund is to become more conservative overtime. As each Retirement Date Fund moves closer to it’s target retirement date, the allocations adjust from more aggressive investments in equities to less aggressive investments such as bonds and cash. Investing in this type of fund is easy: the only decision you have to make is when you want to retire. Then, you select the fund with a target date closest to the year in which you plan to retire. You will note, the funds’ investment allocations become more conservative over time as the target retirement date draws closer. Please refer to each fund’s prospectus to determine if any are right for you.
Here are the lists of funds available to you in the manual solution option, with the corresponding Morningstar categories. You can choose from 15 diversified fund options in this solution. More investment risk information is available on slides 24, 28 & 29.
Keeping track of your asset allocation may get confusing, but there’s plenty of help available. As a plan participant, you’ll regularly receive updated information on your account and funds. But, one of the most important things you can do as you plan for retirement is to evaluate your goals, design a plan that is suitable to your needs and stay informed. DWS Retirement Services offers a number of communication tools to help you manage your retirement portfolio. If you’d like to access your account 24/7 2 , you can use Voice Response System (VRS) 1 , the automated phone line, or you may contact our Employee Service Center , Monday thru Friday, 8.00 am – 9.00 pm, to speak with a representative. You also have the option to visit the online retirement account access. All of these options allow you to: Check your account balance Make transfers between funds Receive loan information and process loan requests Change your contributions View most recent investment performance information www.dwsretire.com – When you access this one-stop resource center you’ll find several tools that can help you learn to save for retirement including articles, calculators and interactive charts. Retirement Focus – This quarterly participant newsletter contains a wealth of timely retirement plan and economic information designed to help you learn more about retirement planning. Retirement Focus Monthly e-newsletter – Each month DWS Retirement Services publishes an electronic newsletter for participants and contains a wide variety of articles from market news and retirement savings tips. Newspaper and financial magazines – These types of publications can provide you with extra insight into the world of retirement planning on a daily basis. Many publications are available online, too, for quick access and convenience. 1 The VRS, Employee Service Center and Online Retirement Account Access are offered by ADP Retirement Services, the recordkeeper for DWS Investments retirement plans. You may transact business in English or Spanish via the VRS. Employee Service Center representatives are registered representatives of ADP Broker-Dealer, Inc., One ADP Blvd., Roseland, NJ; an affiliate of ADP, Inc.; Member FINRA, SIPC. 2 1 24/7 means generally available 24 hours a day, seven days a week except for periods of scheduled maintenance.
Let’s recap. We’ve discussed: The three basic steps to retirement planning Set goals Create a plan Invest for retirement Investing basics Benefits of tax deferred retirement planning Diversification Asset Allocation Understand your investment options Know how to put it all together Now is the time to be informed. Remember, you may call 1-800-541-7705 or visit www.dwsretire.com . - Q &A
ECT Basic Retiremen Education Meeting
A New Beginning Hector Palacios SageView Advisory Group
Agenda <ul><ul><li>The current market environment </li></ul></ul><ul><ul><li>Plan highlights </li></ul></ul><ul><ul><li>3 steps to retirement planning </li></ul></ul><ul><ul><li>Asset allocation </li></ul></ul><ul><ul><li>Understand the Plan’s investment options </li></ul></ul><ul><ul><li>Put it all together </li></ul></ul><ul><ul><li>Get going! </li></ul></ul>Page
The Perfect Storm: A Credit and Economic Crisis Page -Issue of sub-prime mortgage obligations -Investment Banks (Lehman, Merrill, AIG) invest heavily in Mortgage Backed Securitys (MBSs) -Ever increasing excess housing inventory leads to -Housing price decline -Changes in ability to re-finance -Homeowner equity plummets. Home owners owe more than homes are worth. Variable Mortgage rates kick in. Housing Crisis Financial Crisis -Bank issued mortgages default at much higher rate than anticipated -MBSs lose significant value resulting in -Investment Bank losses in the billions -Investment Bank capital declines dramatically leads to -Investment Bank Failure Liquidity Crisis -Significant Investment Bank losses leads to -Banks reluctant or unable to lend resulting in -Loss of liquidity in markets -Severe confidence crisis -Extreme volatility in markets -Government rescue plan created Loss of $1.9 Trillion of investor retirement savings as of October 2008 1 1 Loss of a total $1.9 trillion in assets in the year between October 9, 2007 and October 9, 2008, according to the Center for Retirement Research at Boston College.
The Fallout <ul><li>Financial services’ names have disappeared </li></ul><ul><ul><li>Lehman Brothers – Bankrupt </li></ul></ul><ul><ul><li>Merrill Lynch – Fire sale to Bank of America </li></ul></ul><ul><ul><li>Bear Stearns – Fire sale to JP Morgan </li></ul></ul><ul><li>Decline of consumer US & global markets confidence </li></ul><ul><li>Extreme market volatility </li></ul><ul><li>Implementation of $700b rescue plan by the Fed & US Treasury </li></ul>Page
Capabilities You Can Depend On <ul><li>Deutsche Bank - A Solid Foundation*: </li></ul><ul><li>Thanks to a strong capital position, broad funding base and its globally diversified business model, Deutsche Bank is currently in a solid position. Focus, operational strength and disciplined risk management are at the core of the bank's DNA. </li></ul><ul><li>DWS Investments - A Global Perspective: </li></ul><ul><li>Deutsche Bank's global mutual fund brand - DWS - ranks in the Top 10 globally in terms of mutual fund assets under management. 2 </li></ul><ul><li>With over 900 investment professionals in 16 countries, DWS Investments monitors market movements around the clock, not only in the US but across the globe. 3 </li></ul><ul><li>DWS Investments delivers direct access to the vast intellectual capital supporting Deutsche Bank's global investment platform. </li></ul><ul><li>Even in times of market volatility, you can rely on our resolve and integrity, global vision, vast resources, and most importantly, our unflagging commitment to our clients. </li></ul>Page *Deutsche Bank does not financially back or support any DWS Investments products. 1 Conversion calculated as of Nov. 13, 2008. 2 Includes Deutsche Bank products; source: Strategic Insight, Lipper FERI, ITA, AAM, DWS. 3 As of 12/31/08. Access Deutsche Bank's strength of reputation and leadership through your DWS Investments relationship.
Weathering the Storm <ul><ul><li>To see your way through uncertain market conditions: </li></ul></ul><ul><ul><li>Stay focused on what the market has done in the past to maintain perspective </li></ul></ul><ul><ul><li>Stay invested and maintain a strategy for your long-term savings </li></ul></ul><ul><ul><li>Stay informed and get personalized guidance </li></ul></ul><ul><ul><li>Stay diversified among different asset classes </li></ul></ul>Page
Review of Your Everett Charles Technologies 401(k) Retirement Savings Plan features <ul><li>Automatic Enrollment </li></ul><ul><ul><li>At 4% of eligible compensation after completion of one month of service. </li></ul></ul><ul><ul><li>Automatically increase annually by 1% until your salary deferral reaches 12% </li></ul></ul><ul><ul><li>Automatic elections are invested in a T. Rowe Price Retirement Date Fund based on your date of birth. </li></ul></ul><ul><li>Contributions </li></ul><ul><ul><li>1% to 99% of your eligible compensation* </li></ul></ul><ul><ul><li>Contributions can be made up to the IRS limits** </li></ul></ul>Page *Highly Compensated Employees (HCEs) are limited to contributing up to a maximum of 12%. ** Employees age 50 or over can contribute an additional $5,000 in 2008 Plan highlights are created by ADP Inc. Retirement Services Division. Neither DWS Investments Distributors Inc. nor any of its affiliates are responsible for the content. Except as otherwise specifically noted herein. ADP, Inc. is not responsible for the remainder of the context of this presentation.
Review of Your Everett Charles Technologies 401(k) Retirement Savings Plan features <ul><li>Company matching contributions </li></ul><ul><ul><li>The contribution amount is a discretionary amount that is determined by ECT for each plan year. </li></ul></ul><ul><li>Vesting </li></ul><ul><ul><li>Immediately 100% vested in all your own contribution (e.g., salary deferral) accounts. </li></ul></ul><ul><ul><li>The vesting schedule for company matching contribution accounts is: </li></ul></ul><ul><ul><ul><li>Vesting Years 1 2 3 4 5 </li></ul></ul></ul><ul><ul><ul><li>% of Ownership 20% 40% 60% 80% 100% </li></ul></ul></ul><ul><ul><li>Plan loans and withdrawals are available </li></ul></ul>Page Plan highlights are created by ADP Inc. Retirement Services Division. Neither DWS Investments Distributors Inc. nor any of its affiliates are responsible for the content. Except as otherwise specifically noted herein. ADP, Inc. is not responsible for the remainder of the context of this presentation.
Your Retirement Future The Way You Want It Page Set goals Create a plan Invest for retirement I T ’ S A S E A S Y A S 1 2 3
1. Set Goals <ul><li>What’s your plan for retirement? </li></ul><ul><ul><li>Taking an exotic vacation </li></ul></ul><ul><ul><li>Learning a new skill </li></ul></ul><ul><ul><li>Spending time with family </li></ul></ul><ul><ul><li>Starting a new career </li></ul></ul>Page <ul><li>Learning Tool: </li></ul><ul><li>Go to www.dwsretire.com </li></ul><ul><li>Click on the article, Make the Most of </li></ul><ul><li>Your 401(k) , </li></ul><ul><li>This article will help you understand the basic features of 401(k) plans and discover the importance of saving toward your retirement. </li></ul>
1. Set Goals <ul><li>Factor inflation into your plan for retirement </li></ul><ul><ul><li>If inflation decreases the value of a dollar by 3% per year over the next 30 years, consider the cost of some common items in 2039: </li></ul></ul>Page Source: National Coffee Association, National Coffee Drinking Trends, National Association of Theatre Owners, Bureau of Labor Statistics, US Postal Service and Standard & Poor’s Financial Communications, 2006 and 2007. The average rate of inflation is 3% over the past 20 years.
2. Create A Plan <ul><li>Sources of retirement income </li></ul>Page Sources: ChartSource, Standard & Poor's Financial Communications. Data is from Fast Facts & Figures About Social Security, published by the Social Security Administration, September 2008. (CS000123)
2. Create A Plan <ul><li>The advantages of starting early </li></ul>Page This hypothetical illustration does not represent an investment in any particular option. It assumes that both individuals earn an 8% annual return. Actual rates of return cannot be predicted and will fluctuate. Your returns may be more or less. Of course, the retirement values will be taxed when Michelle and Joe begin taking distributions. Michelle Joe Starting age 24 35 Ending age 34 65 Monthly contribution $100 $100 Total contribution $12,000 $36,000 Years contributed 10 30 Approx. value at age 65 $188,922 $146,815
3. Invest For Retirement <ul><li>Participating in a tax-deferred retirement plan </li></ul><ul><ul><li>Contributions can be made before taxes are taken out of your paycheck </li></ul></ul><ul><ul><li>This reduces the current amount of taxes you pay on your income, since you’re paying taxes on a smaller amount of money </li></ul></ul><ul><ul><li>You pay no taxes on the money you contribute or any gains until you withdraw it from the retirement plan </li></ul></ul><ul><ul><li>Retirement assets will be taxed upon withdrawal and there may be a 10% IRS penalty for withdrawals made prior to age 59 ½ </li></ul></ul><ul><ul><li>You may be eligible to take a tax credit (a.k.a. the Saver’s Credit) 1 </li></ul></ul>Page 1 Source: Internal Revenue Service, www.irs.gov. This information is not intended to provide tax or legal advice and should not be relied upon as such. Any specific tax or legal questions concerning the matters described in this slide should be discussed with your tax or legal advisor. Neither DWS Retirement Services nor ADP, Inc. gives tax or legal advice.
3. Invest For Retirement <ul><li>The power of tax-deferred compounding </li></ul>Page <ul><li> Participating in a taxable savings plan </li></ul><ul><li> Participating in a tax-deferred retirement plan </li></ul>Assumes a 25% federal tax bracket, a constant 8% annual return, a $1,200 annual investment in a tax-deferred retirement plan (before taxes) and a $1,200 annual investment in a comparable taxable savings plan. This illustration is hypothetical and does not represent the performance of any particular investment. Investing entails risks, including the possible loss of your principal. Actual returns cannot be predicted and will fluctuate in response to changing market conditions. Your results may be more or less. Retirement assets will be taxed eventually (upon withdrawal), and there may be a 10% federal tax penalty for withdrawals made prior to age 59½. This example assumes federal income tax only.
3. Invest For Retirement <ul><li>Understanding mutual funds </li></ul><ul><ul><li>A mutual fund is a professionally managed pool of money that may invest in a variety of financial instruments, including stocks, bonds and stable value products based on its stated investment objective </li></ul></ul><ul><ul><li>Offers immediate diversification 1 </li></ul></ul>Page 1 Diversification does not eliminate the risk of potential loss or guarantee a gain. Stable Value Bond Balanced Stock International Low risk Low return Medium risk High risk Medium return High return
3. Invest For Retirement <ul><li>Major market environments, average annual total returns 1926 - 2008 </li></ul>Page Stable Value Source: ChartSource, Standard & Poor's Financial Communications. Stocks are represented by the total returns of Standard & Poor's Composite Index of 500 Stocks, an unmanaged index that is generally considered representative of the U.S. stock market. Bonds are represented by the total returns of the composite of long-term government bonds (10+ years), constructed from yields published by the Federal Reserve, and the Barclays Long-Term Government Bond index. Cash is represented by the composite of the yield of 3-month Treasury bills published by Federal Reserve and the total return of the Barclays 3-Month Treasury Bill index. Inflation is represented by the change in the Consumer Price Index. Note that prior to November 2008, the Barclays indexes were calculated by Lehman Brothers. Past performance is not a guarantee of future results. (CS000031) This chart compares the annualized total returns of stocks, bonds, and cash and inflation, through December 31, 2008, over the past 5-, 10-, and 20-year periods and since 1926.
<ul><li>Long-term investors have been rewarded despite short-term ups-and-downs </li></ul><ul><ul><li>Growth of an assumed $1,000 investment in the S&P 500 Index (12/31/50 to 12/31/08) </li></ul></ul>3. Invest For Retirement Page Past performance is no guarantee of future results. 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2008 Sources: Thomson Financial and Lipper Inc. Due to the length of time shown, the growth chart uses a logarithmic scale and assumes a $1,000 investment on 12/31/50. It is not intended to represent any DWS mutual fund. Negative periods reflect all market corrections and bear markets of 15% or more since 1951, while positive periods reflect all comparable market rallies. Index returns assume reinvestment of all distributions and do not reflect fees, expenses or sales charges, which would have lowered returns. You cannot invest directly in an index. Index stocks could have had significant negative results. Index performance may be positively or negatively influenced by a relatively small number of stocks. $10 $1 (In thousands) +226% 12/50 to 7/57 +105% 12/57 to 12/61 +90% 6/62 to 1/66 +52% 9/68 to 11/68 +76% 9/70 to 12/72 +196% 9/74 to 11/80 +280% 7/82 to 8/87 +72% 11/87 to 5/90 +355% 10/90 to 6/98 +63% 8/98 to 8/00 +98% 9/02 to 12/07 $487,044 -15% 7/57 to 12/57 -22% 12/61 to 6/62 -29% 11/68 to 6/70 -43% 12/72 to 9/74 -17% 11/80 to 7/82 -30% 8/87 to 11/87 -15% 5/90 to 10/90 -15% 6/98 to 8/98 -45% 8/00 to 9/02 -16% 1/66 to 9/68 -37% 12/07 to 12/08
3. Invest For Retirement Stay Invested Page Stock Market Performance Following Bear Markets Internet and 9/11, 2001 Crisis 8/31/2000 – 9/30/2002 -45% 4/30/2006 NA 24% Great Depression 8/31/1929 – 6/30/1932 -83% 1/31/1945 9/30/1950 132% 1970s Oil and Inflation Crisis 12/31/1972 – 9/30/1974 -43% 6/30/1976 2/28/1982 32% 1960’s Tech Bust 12/31/1961 – 6/30/1962 -22% 4/30/1963 1/31/1972 31% Current Crisis 10/07 – present -36% ? ? ? Bear Market 1 Date Percentage Downturn Date to Recoup Initial Investment Date to Double Investment 1 year gain after bottom Source (except for Current Crisis): Morningstar/Ibbotson. As of 9/30/08. Bear Markets defined as -20% or greater. Month-end returns used only - not daily returns. 1980’s Crisis 8/31/1987 – 11/30/1987 -30% 4/30/1989 4/30/1995 23% Past performance is no guarantee of future results.
3. Invest For Retirement <ul><li>Familiarize yourself with these asset classes </li></ul><ul><ul><li>Stable value products </li></ul></ul><ul><ul><ul><li>Seek to maintain a stable principal whose value does not fluctuate like that of stocks or bonds </li></ul></ul></ul><ul><ul><ul><li>May not keep up with inflation </li></ul></ul></ul><ul><ul><li>Bonds </li></ul></ul><ul><ul><ul><li>Issued by a government or corporation, similar to an “IOU” </li></ul></ul></ul><ul><ul><ul><li>Bond prices rise as interest rates fall, and vice versa </li></ul></ul></ul><ul><ul><ul><li>Offer more risk than stable value products </li></ul></ul></ul><ul><ul><li>Stocks </li></ul></ul><ul><ul><ul><li>Represents a share of a company </li></ul></ul></ul><ul><ul><ul><li>Provide potential growth for your portfolio </li></ul></ul></ul><ul><ul><ul><li>Offer higher risk than bonds or stable value products </li></ul></ul></ul>Page All investments involve risk, including the possible loss of principal. Some have more risk than others. 1 Stable value investments can include money market funds which seek to maintain a constant net asset value of $1.00 per share, but there can be no assurance that the stable net asset value will be maintained. It is possible to lose money. Investments in these funds are neither insured nor guaranteed by the US government.
Asset Allocation <ul><ul><li>Asset allocation is the process of deciding how your money should be spread among the different asset classes </li></ul></ul><ul><ul><li>Your age, amount of time to retirement, comfort level with risk and your financial goals help determine which asset allocation is best for you </li></ul></ul>Page <ul><li>Learning Tool: </li></ul><ul><li>Access www.dwsretire.com </li></ul><ul><li>Click on the Quicklink, How Much Do I </li></ul><ul><li>Need to Save? </li></ul><ul><li>Check out the iChart, Rebalancing </li></ul><ul><li>Your Asset Allocation </li></ul><ul><li>Here you will learn how to spread your money among different asset classes and understand the importance of rebalancing your investment mix. </li></ul>Your personal retirement planning strategy
Asset Allocation <ul><li>Sample portfolio models </li></ul>Page Please keep in mind, the sample allocation is not meant to be construed as a recommendation or investment advice. Rather, it is intended to give you a point of reference when considering your own unique situation. You may have additional concerns not reflected herein that may affect your investment decisions. Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses. All investments involve risk including the possible loss of principal. 30% stocks 30% money market instruments 40% bonds Conservative Moderate Aggressive 50% stocks 20% money market instruments 30% bonds 80% stocks 10% money market instruments
Understanding the Plan’s Investment Options <ul><li>Automatic Solution— T. Rowe Price Retirement Date Funds </li></ul><ul><ul><li>Highly diversified mutual funds </li></ul></ul><ul><ul><li>Helps you meet your changing financial needs now and during retirement </li></ul></ul><ul><ul><li>Professionally managed for your stage of retirement planning </li></ul></ul><ul><ul><li>Your only step is to decide when you want to retire </li></ul></ul><ul><ul><ul><li>Investment options are designed to help you capitalize on growth opportunities to build assets during your retirement savings years </li></ul></ul></ul><ul><ul><ul><li>Automatically grows more conservative as your retirement date nears </li></ul></ul></ul><ul><li>Manual Solution— Remaining investment options </li></ul><ul><ul><li>Build a portfolio using the core investment options from your retirement plan account </li></ul></ul><ul><ul><li>Review, revise and rebalance your portfolio periodically </li></ul></ul><ul><ul><ul><li>Make adjustments when your circumstances change </li></ul></ul></ul>Page
Understanding the Plan’s Investment Options <ul><li>Automatic Solution— T. Rowe Price Retirement Date Funds </li></ul><ul><ul><li>T. Rowe Price Retirement Income Fund, Retail Class </li></ul></ul><ul><ul><li>T. Rowe Price Retirement 2010 Fund, Retail Class </li></ul></ul><ul><ul><li>T. Rowe Price Retirement 2020 Fund, Retail Class </li></ul></ul><ul><ul><li>T. Rowe Price Retirement 2030 Fund, Retail Class </li></ul></ul><ul><ul><li>T. Rowe Price Retirement 2040 Fund, Retail Class </li></ul></ul><ul><ul><li>T. Rowe Price Retirement 2050 Fund, Retail Class </li></ul></ul>Page Diversification does not eliminate risk. The underlying mutual funds in the portfolios of the Asset Allocation funds are subject to stock market risk and invest in individual bonds whose yields and market values fluctuate, so that your investment may be worth more or less than its original cost. More investment risk information is provided on slide 25, 28 & 29 of this presentation.
Understanding the Plan’s Investment Options <ul><ul><li>DWS Stable Value Fund </li></ul></ul><ul><ul><li>DWS Core Fixed Income Fund, S Class </li></ul></ul><ul><ul><li>American Century Equity Income Fund, Inv Class </li></ul></ul><ul><ul><li>T. Rowe Price Equity Income Fund, Adv Class </li></ul></ul><ul><ul><li>DWS Stock Index Fund1 </li></ul></ul><ul><ul><li>DWS Capital Growth Fund, Class S </li></ul></ul><ul><ul><li>Goldman Sachs Mid Cap Value Fund, Class A </li></ul></ul><ul><ul><li>AIM Capital Development Fund, Class A </li></ul></ul><ul><ul><li>DWS RREEF Real Estate Securities Fund, Class S </li></ul></ul><ul><ul><li>Allianz NFJ Small-Cap Value Fund, Admin Class </li></ul></ul><ul><ul><li>Allianz CCM Emerging Companies Fund, Admin Class </li></ul></ul><ul><ul><li>Royce Value Plus Service Fund, Service Class </li></ul></ul><ul><ul><li>American Funds EuroPacific Growth Fund, Class R4 </li></ul></ul><ul><ul><li>DWS Global Opportunities Fund, Class S </li></ul></ul><ul><ul><li>Oppenheimer International Small Company Fund, Class A </li></ul></ul><ul><ul><li>N/A </li></ul></ul><ul><ul><li>SFXSX </li></ul></ul><ul><ul><li>TWEIX </li></ul></ul><ul><ul><li>PAFDX </li></ul></ul><ul><ul><li>N/A </li></ul></ul><ul><ul><li>SCGSX </li></ul></ul><ul><ul><li>GCMAX </li></ul></ul><ul><ul><li>ACDAX </li></ul></ul><ul><ul><li>RRGTX </li></ul></ul><ul><ul><li>PVADX </li></ul></ul><ul><ul><li>PMGAX </li></ul></ul><ul><ul><li>RYVPX </li></ul></ul><ul><ul><li>REREX </li></ul></ul><ul><ul><li>SGSCX </li></ul></ul><ul><ul><li>OSMAX </li></ul></ul>Page Manual Solution–Investment Options choices DWS Stable Value Trust seeks to maintain a constant net asset value of $1.00 per share, but there can be no assurance that the stable net asset value will be maintained. It is possible to lose money. Investments in this fund are neither insured nor guaranteed by the US government. DWS Stable Value Fund and DWS Stock Index Fund are collective investment trusts, not mutual funds. Collective investment trusts have similar characteristics to mutual funds, but are structured differently. Collective investment trusts do not have prospectuses. DWS Stock Index Fund only purchases shares of the State Street S&P 500 Fund. More investment risk information is provided on slide 24, 28 & 29 of this presentation. Investment Option Ticker Symbol
Putting It All Together Page <ul><ul><li>Evaluate goals </li></ul></ul><ul><ul><li>Design a plan that is suitable to your individual goals </li></ul></ul><ul><ul><li>Stay informed </li></ul></ul><ul><ul><ul><li>Access www.dwsretire.com for your online tools and resources </li></ul></ul></ul><ul><ul><ul><li>Use the Voice Response System 1 at 1-800-541-7705 </li></ul></ul></ul><ul><ul><ul><li>Contact the Employee Service Center 1 at 1-800-541-7705 and press “0” </li></ul></ul></ul><ul><ul><ul><li>Attend regularly scheduled one-on-one SageView advisory sessions </li></ul></ul></ul><ul><ul><ul><li>Review your quarterly statement and Retirement Focus newsletter </li></ul></ul></ul><ul><ul><ul><li>Read the latest Retirement Focus monthly e-newsletter </li></ul></ul></ul><ul><ul><ul><li>Gain additional insight through newspapers and financial magazines </li></ul></ul></ul>1 The VRS, Employee Service Center and Online Retirement Account Access are offered by ADP Retirement Services, the recordkeeper for DWS Investments retirement plans. You may transact business in English or Spanish via the VRS. Employee Service Center representatives are registered representatives of ADP Broker-Dealer, Inc., One ADP Blvd., Roseland, NJ; an affiliate of ADP, Inc.; Member FINRA, SIPC.
Get Going <ul><li>What we’ve talked about </li></ul><ul><ul><li>3 steps to retirement planning </li></ul></ul><ul><ul><li>Invest for retirement </li></ul></ul><ul><ul><li>Asset allocation </li></ul></ul><ul><ul><li>Understand your investment options </li></ul></ul><ul><ul><li>Put it all together </li></ul></ul>Page
Investment Risks Page Investments in mutual funds and in asset allocation funds involve risk. Diversification does not eliminate risk. Some investment products have more risk than others, such as those investing in commodity-related securities, which are subject to market price movements, regulatory changes and economic conditions as well as adverse political and financial factors. Bond investments are subject to interest-rate risk such that when interest rates rise, the prices of the bonds, and thus the value of the bond investment, can decline and the investor can lose principal value. Investing in foreign securities present certain risks, such as currency fluctuations, political and economic changes and market risks Furthermore, there are additional risks associated with investing in non-US companies, high-yield bonds, emerging markets, aggressive growth stocks, non-diversified/concentrated funds and small-, mid- and micro-cap stocks which are more fully explained in the prospectuses. The underlying mutual funds in the portfolios of Asset Allocation funds are subject to stock market risk and invest in individual bonds whose yields and market values fluctuate, so that your investment may be worth more or less that its original price. Please read the prospectus for more information. DWS Investments funds are distributed by DWS Investments Distributors, Inc.; American Century funds are distributed by American Century Investment Services, Inc.; AIM funds are distributed by AIM Distributors, Inc.; Allianz funds are distributed by Allianz Global Investors Distributors LLC; American funds are distributed by American Funds Distributors, Inc.; Goldman Sachs funds are distributed by The Goldman Sachs Group, Inc.; Oppenheimer funds are distributed by Oppenheimer Funds Distributor, Inc.; Royce funds are distributed by Royce Fund Services, Inc.; T. Rowe Price funds are distributed by T. Rowe Price Investment Services, Inc. Distributor Information