UBS Financial Services Inc.

Retirement Plan Asset Allocation Guide

Planning how to invest for your retirement may be one of the most important decisions
you’ll ever make. Asset allocation is a strategy that can serve as a valuable blueprint
for your financial future.
Create a focused, disciplined investment plan
Asset allocation reflected in your investment choices. Planning for retirement
What is an asset allocation strategy? today means taking responsibility for your financial future.
Asset allocation is the disciplined process of strategically dividing
your money among a range of asset classes, such as stocks, The UBS Retirement Plan Asset Allocation Strategies
bonds and stable value investments, each of which have UBS provides six proprietary, well-diversified asset allocation
different risk and return characteristics. (See the following pages strategies that reflect a global investment viewpoint. Each asset
for a description of each asset class and the risks typically allocation strategy is general in nature and not individualized for
associated with each.) any particular participant. The strategies represent a blend of
different asset classes that are prevalent in retirement plans;
Taking into consideration your goals, time horizon and tolerance however, you should confirm they are offered by your plan.
for risk, you can develop a focused, disciplined approach to The strategies range from an investment mix that provides the
investing that can help you pursue individual goals within your least potential for appreciation with the least amount of
risk profile. expected volatility (conservative) to one that offers the greatest
potential for appreciation with the greatest potential for volatility
How does asset allocation work? (aggressive). In addition, an all-equity strategy is available
Asset allocation works on the principle that investments in various (see page 6, “All Equity”).
asset classes will react to changing markets with materially
different rates of return and levels of volatility. Volatility risk is the UBS has changed its proprietary asset allocation strategies in
risk that the value of your investments will fluctuate over time and the past and may do so in the future as circumstances warrant.
could drop in value. For example, while one investment may suffer Please contact your plan administrator for confirmation that
a decline due to market fluctuation, another investment may you are using the most up-to-date version of this Guide. For a
simultaneously increase in value and offset the decline. detailed explanation on the UBS processes and assumptions used
in developing the asset allocation strategies, see the Additional
Focus on the long term Information section at the end of this guide.
It is also important to remember that asset allocation is a long-
term strategy. It isn’t about short-term investment returns or About the asset classes
outperforming the stock market for the moment. The idea is to Money market funds
select an asset allocation and stick with it through the inevitable Some retirement plans offer money market funds, which invest
stock market ups and downs—reassessing as necessary and in commercial paper, government securities, certificates of
rebalancing when appropriate—while taking into account life deposit and other highly liquid securities, and pay rates of
events or changes in your risk profile. interest. The fund’s net asset value strives to remain a constant
$1 per share with only the interest rate moving up or down.
It is important to note that asset allocation does not assure
a profit or protect against a loss in declining markets. Stable value investments
Stable value investment options may be structured in different
Factors to consider ways; these options should be considered carefully before
Your asset allocation strategy will also help you sharpen your investing. Under some retirement plans, the stable value option
focus on your retirement goals and how to get there. In is a separate account with the issuer that holds some combination
determining your strategy, you will have to consider some of bonds, guaranteed investment contracts (GICs) and synthetic
very influential and important factors: GICs. In the event of the insolvency of the issuer, the assets in
– What is your time horizon? (When will you need to start the separate account may not be subject to general creditors’
withdrawing your retirement assets?) claims but rather only to the claims of the investors in the separate
– How do you feel about risk? (Can you withstand volatile account. Under other plans, the stable value option is a
market conditions for an extended period of time?) commingled investment fund, which invests assets contributed
– What are your retirement goals? (How much money will by any number of qualified plans in the same types of assets.
you ultimately need?)
Traditional GICs are contracts between an insurance company
Keep in mind that your company’s retirement plan represents and a retirement plan or stable value fund under which the
only one aspect of your overall retirement savings strategy. In insurance company guarantees it will repay the amounts
applying an asset allocation strategy to your retirement plan deposited under the contract at a predetermined date, together
account and your individual situation, you should also consider with interest at a fixed rate of return. The guarantee is made
other assets, income and investments, including home equity, by the issuing insurer and is based on its ability to pay.
individual retirement accounts (IRAs), personal savings, Social
Security and other retirement savings plans. Synthetic GICs are bond portfolios that are owned by a
retirement plan or stable value fund and “wrapped” by
The importance of periodic reviews contracts issued by insurance companies, banks or other
As with any long-term plan, it is important to periodically financial institutions. As with a traditional GIC, a synthetic
analyze and reevaluate your goals, objectives and overall GIC guarantee is made solely by the issuing insurer and is
strategy. Make sure any changes in your life situation are based on its ability to pay.

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Stable Value investments seek to reduce the risk of principal loss – Over the long term, bonds have generally been less volatile
and provide a consistent rate of return; however, they may offer than stocks but historically are subject to credit risk and
limited potential for appreciation. interest rate risk. Credit risk is the risk that the company
issuing a bond may be unable to pay interest or repay
Fixed income
principal. Interest rate risk refers to the fact that the value
Fixed Income (Bonds) represent a loan from the purchaser of the
of bonds may go up or down when interest rates fluctuate.
bond to the company or government that issues the bond. In
return, the issuer pays the purchaser interest until the “maturity For example, when interest rates rise, the value of a bond
date” (the date the loan is repaid) of the bond. The value of a will decline, and vice versa.
bond investment usually rises when interest rates decline and
decreases when interest rates rise. A bond’s yield and value – Money market investments have the least volatility risk but
fluctuate and can be affected by changes in interest rates, offer the least potential for appreciation in value. These
general market conditions and other political, social and investments are subject to inflation risk. Inflation risk is the
economic developments. risk you may not earn enough of a return on your money to
cover inflation. Investors in money market funds should be
Stocks aware that an investment in the fund is neither insured nor
A stock represents ownership in a company. Purchasers own a guaranteed by the US government. There can be no
portion of that company and can participate in that company’s assurance that the fund will be able to maintain a stable
potential for capital appreciation. Generally, the performance of net asset value at $1.00 per share or unit. These investments
the company impacts the share price, although the value of also may be subject to credit risk.
stock investments can also increase during periods when stock
markets rise and decrease when stock markets fall. – A stable value fund does not constitute a balanced investment
plan. Stable value investment contracts seek to reduce the risk
Large company stocks of principal loss; however, investing in a stable value portfolio
Large company stocks (large-cap stocks) are typically issued involves risk, including credit risk, management risk and loss
by well-established companies with market capitalizations of of principal. These risks could result in a decline in the
$10 billion or more. Market capitalization is the value of a portfolio’s value or cause a withdrawal or transfer from a
company’s outstanding shares in the marketplace. Large-cap portfolio to occur at less than a participant’s invested value.
stocks tend to be less volatile over the short term than small
and medium company stocks. Stable value investment contracts involve several unique risks,
which include but are not limited to: a stable value
Small and medium company stocks investment contract issuer could default, become insolvent,
Small company stocks (small-cap stocks) are issued by file for bankruptcy protection or otherwise be deemed by
companies that have market capitalizations under $1 billion. the plan’s auditor to no longer be financially responsible;
Small-cap companies are subject to a greater degree of change some portfolio securities could become impaired or default;
in earnings and business prospects than are larger, more certain communications from the plan or the plan’s agents
established companies. Medium company stocks (mid-cap may cause an investment contract to not pay benefits at
stocks) are issued by companies that have market capitalizations contract value; or there could be a change in tax law or
between $1 billion – $10 billion. Investments in small and mid- accounting rules. Other risks include a risk that fund returns
cap stocks can be more volatile over the short term than will not keep pace with the cost of living (inflation risk) and
investments in large-cap stocks. However, they can offer that the fund’s price per share will change as a result of
investors greater potential for appreciation. movements in market interest rates, resulting in gains
or losses on investments made in the fund (market risk).
International stocks
International stocks are issued by non-US companies. These Additionally, there is a risk that a fund’s income will decline
companies are subject to the same risks as those mentioned in as a result of falling interest rates. Investments are generally
the previous stock descriptions. Also, foreign stock investments made for terms of at least two to five years, on average,
may have the following additional risks: currency fluctuation, producing a rate of fund income that generally will be higher
market illiquidity, political risk and the lack of adequate or timely than that earned on shorter-maturity money market funds.
company information. Because they may react differently to But because it is influenced by average interest rates over a
market fluctuations, international stocks may offer an effective period of several years, the fund’s income yield may remain
counterbalance to domestic stocks.
above or stay below current market yields during some time
periods (income risk). Any of these risks, if realized, may cause
Asset class risks and rewards
a write-down in the value of a portfolio and a risk of loss of
Each asset class—and each investment option—has different
risks and objectives, and tends to perform differently during all or a part of a participant’s invested value in a portfolio.
various market cycles.
– Historically, equities are more risky than fixed income or cash When choosing your investment strategy, you should keep
investments since they experience greater volatility risk, which in mind the risks and potential rewards associated with each
asset class.
is the risk that the value of your investment may fluctuate
over time. The value of investments in equity securities will
fluctuate in response to general economic conditions and to
changes in the prospects of particular companies and/or
sectors in the economy.

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Updating your deferral allocation
Once you have identified the strategy that is right for you,
you should consider updating your account so your future
contributions are invested into the funds that match your
selected allocation.

Rebalancing your account

Because the performance of the various asset classes will
vary over time, you can expect your retirement account’s asset
allocation percentages to become out of balance from your
original strategy. Rebalancing your account simply means
reallocating your investments back to your initial asset allocation
strategy. Using your retirement account statement, you can
compare your current asset allocation with your original asset
allocation strategy and determine when it’s time to rebalance.

Please note, certain plans may place trading restrictions on

transfers between conservative bonds or stable value
investments. These restrictions are generally put in place in
order to maintain the stability of the overall funds and to
prevent market timing. To learn if your specific retirement
plan has these types of restrictions, please see your plan’s
Summary Plan Description.

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UBS Retirement Plan Asset Allocation Strategies
Read the descriptions of the hypothetical investors for each strategy below and see which you identify with. Remember
that in applying any of these strategies to your individual situation, you should consider your age, proximity to
retirement, personal risk tolerance, assets, income and investments outside of the plan such as equity in a home, IRA
investments, savings accounts and other benefit plans.

1. Conservative strategy
Hypothetical investor who:

– Is approaching retirement (age 60 or over) and wants little Fixed income 84%
exposure to stock market fluctuations in anticipation of
needing to withdraw investment savings soon International equity 6%
US large-cap equity 7%
– Is a younger investor with a very low tolerance for risk
US mid-cap equity 2%
– Is anticipating the need to withdraw money from the plan
soon and wants little exposure to stock market fluctuations US small-cap equity 1%

This strategy has less volatility risk and is subject to, over the
long term, less protection against inflation than the following,
more aggressive strategies.

2. Moderately conservative strategy

Hypothetical investor who:

– Is drawing closer to retirement (age 50 – 60) and wants Fixed income 68%
some exposure to stock market growth, but predominantly
International equity 14%
prefers the relative stability of fixed income investments
US large-cap equity 13%
– Is a younger investor with a low tolerance for risk
US mid-cap equity 3%
– Is anticipating a need to withdraw money from the plan
US small-cap equity 2%
soon and, therefore, wants most of the assets in the
account to have little exposure to stock market fluctuation

This investment strategy is predominantly conservative with

relatively small exposure to stock investments and, therefore,
is subject to higher inflation risk than the following, more
aggressive strategies.

3. Moderate strategy
Hypothetical investor who:

– Has quite a few years to go until retirement Fixed income 51%

(age 40 – 50) but prefers a more even mix between the
International equity 23%
stability of less volatile fixed income investments and the
potential for growth offered by stocks US large-cap equity 18%
– Is a younger investor who does not have a high US mid-cap equity 5%
risk tolerance and is willing to forego potentially higher
US small-cap equity 3%
investment returns in order to obtain a potentially
less volatile overall investment strategy

This strategy is for an investor who can withstand

some fluctuation in the overall value of the account, but is
averse to the level of risk associated with the following,
more aggressive strategies.

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4. Moderately aggressive strategy
Hypothetical investor who:

– Has quite a few years to go until retirement Fixed income 32%

(age 35 – 45) but prefers a moderate growth approach
International equity 33%
that balances the relative stability of bond investments
with the potential for growth offered by stocks US large-cap equity 24%

– Is a younger investor who has a moderate risk tolerance US mid-cap equity 7%

but still seeks potentially higher investment returns
US small-cap equity 4%
This strategy is for an investor who can withstand
some fluctuation in the overall value of the account but who
is averse to the level of risk associated with the following,
more aggressive strategies. This strategy has less volatility risk
and provides, over the long term, less protection against
inflation than the following, more aggressive strategies.

5. Aggressive strategy
Hypothetical investor who:

– Has many years to go until retirement (age 30 – 40) and Fixed income 15%
has the ability to ride out stock market fluctuations in
International equity 40%
pursuit of potentially higher growth. This investor desires
to have stock market exposure with less volatility risk US large-cap equity 32%
than the All Equity strategy
US mid-cap equity 8%
– Is a younger investor who has a high risk tolerance and
US small-cap equity 5%
seeks potentially higher investment returns

– Is somewhat closer to retirement, but is willing to accept

the risk of seeking potentially higher returns in a shorter
timeframe

This strategy, like the All Equity strategy, is for an investor with
a fairly high tolerance for risk. In comparison to the very
aggressive All Equity strategy, it carries less volatility risk and
is subject to less potential protection against inflation
over the longer term.

6. All Equity
Hypothetical investor who:

– Has many years to go until retirement (age 20 – 30) and International equity 44%
can ride out stock market fluctuations in pursuit of higher
US large-cap equity 39%
growth potential
US mid-cap equity 11%
– May be closer to retirement but has a very high tolerance
for risk and is seeking to maximize the potential for higher US small-cap equity 6%
growth in assets, regardless of possible large fluctuations in
account value. This investor may also have more plan assets
to invest or other assets outside of the plan.

This strategy is for an investor with the highest risk tolerance.

Compared to the other strategies, this strategy has the most
volatility risk but, over the long term, may provide the most
potential protection against inflation.

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Additional information
Introduction UBS specifically prohibits the reuse or redistribution of this material in
The UBS Retirement Plan Asset Allocation strategies (“UBS Retirement whole or in part without the written permission of UBS and UBS accepts
Strategies”) are provided for illustrative purposes and were designed for no liability whatsoever for the actions of the plan sponsor or third parties
hypothetical participants in US defined contribution retirement plans in this respect.
with a total return objective under six different Investor Risk Profiles
(which include varying time horizons): conservative, moderately Methodology
conservative, moderate, moderately aggressive, aggressive and in The UBS Retirement Strategies were developed by the UBS Wealth
addition, an all-equity strategy. The strategies employ high level asset Management Americas Asset Allocation Committee (“Asset Allocation
classes that are typically offered in a US defined contribution Committee”). In developing the strategies, the Asset Allocation
retirement plan menu. Committee determined a volatility target (standard deviation
percentage)* for each of the strategies. Then, using UBS's proprietary
Your plan may have more than one investment offering in each asset capital market assumptions (described below) the Asset Allocation
class as well as additional asset classes. It is also possible that your plan Committee created allocations that seek to maximize the average
may not offer an investment in each asset class. Information with respect estimated return (mean) for the given volatility target and using only the
to the investments offered in your plan and the asset class in which it is specified high level asset classes. Detailed information about the UBS
categorized is available from your employer or plan administrator. methodology of deriving capital market assumptions and asset allocation
strategies is described in the publication entitled “Strategic Asset
Strategic (long-term) asset allocation strategies will differ among Allocation (SAA) Methodology and Portfolios.” Your plan’s UBS Financial
investors based on their individual circumstances, risk tolerance, return Advisor can provide you with a copy.
objectives and time horizon. The information and materials presented
here are not based on your particular financial situation or needs and do Capital Market Assumptions
not constitute a recommendation by UBS or any UBS Financial Advisor. Capital market assumptions are UBS’s estimated return and risk
The UBS Retirement Strategies in this Guide may not be suitable for all (as measured by standard deviation) assumptions, which are based on
plan participants or investment goals and should not be used as the sole UBS proprietary research, with the development process including review
basis of any investment decision. of a variety of factors such as the risk, return, correlations and historical
performance of various asset classes, inflation and risk premium. These
You are not required to implement any of the Retirement Strategies capital market assumptions are estimates of forward-looking average
and you must make your own independent decisions regarding the annual returns for a particular asset class. They do not represent the
selection of specific investments in your plan account. UBS will not return of a particular security or investment and are not guaranteed.
monitor the ongoing use of this Retirement Plan Asset Allocation Guide
or individual participant asset allocation strategies and investment UBS’s capital market assumptions significantly influence the UBS
choices. Please be aware that the information and materials provided Retirement Strategies. UBS has changed its capital market assumptions
to you by a UBS Financial Advisor are intended to be investment and asset allocation strategies in the past and may do so in the future.
education and that neither UBS nor any of its agents or representatives, Neither UBS nor your UBS Financial Advisor is required to provide you
including the Financial Advisor, has agreed to provide “investment with updated Retirement Strategies based upon changes to these or
advice” under ERISA Section 3(21)(A)(ii) and CFR 2510.3-21(C), or other underlying assumptions; however, the UBS Financial Advisor for
otherwise act as a fiduciary under the Employee Retirement Income your plan can provide you with the most updated Guide.
Security Act of 1974, as amended, or Section 4975 of the Internal
Revenue Code, as amended, with respect to your plan account or
any investment decision concerning that account.

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A fund’s prospectus contains more complete information about the fund, including information on investment objectives, risks, charges and
expenses and risk factors. Please contact your Financial Advisor for a prospectus. The prospectus contains this and other important information
that you should read and consider carefully before investing. The value of the fund will fluctuate.

* Standard deviation is a measure of the dispersion of returns for an investment; the higher the value, the more variable the pattern of returns on a security,
portfolio or index over a specified time period.

Neither diversification nor asset allocation assure a profit or protect against loss in declining markets.

The value of investments in equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies
and/or sectors in the economy.

Small-cap stocks may be subject to a higher degree of risk than more established companies’ securities, including higher volatility.

Foreign investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility
due to adverse political, economic or other developments.

Fixed income securities are affected by a number of risks, including fluctuations in interest rates, credit risk and prepayment risk. In general, as prevailing interest
rates rise, fixed income securities prices will fall. Bonds face credit risk if a decline in an issuer's credit rating, or credit worthiness, causes a bond's price to decline.
For more detail on the risks associated with fixed income securities, please speak with a Financial Advisor.

Neither UBS Financial Services Inc. nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or
your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies,
before you invest or implement.

UBS Retirement Plan Consulting Services is an investment advisory program. Details regarding the program including fees, services, features and suitability are
provided in the ADV Disclosure.

Important information about advisory and brokerage services

It is important that you understand the ways in which we conduct business and the applicable laws and regulations that govern us. As a firm providing wealth
management services to clients in the US, we are registered with the US Securities and Exchange Commission (SEC) as an investment adviser and a broker-dealer,
offering both investment advisory and brokerage services. Though there are similarities among these services, the investment advisory programs and brokerage
accounts we offer are separate and distinct, differ in material ways and are governed by different laws and separate contracts. It is important that you carefully read
the agreements and disclosures that we provide to you about the products or services we offer. While we strive to ensure the nature of our services is clear in the
materials we publish, if at any time you seek clarification on the nature of your accounts or the services you receive, please speak with your Financial Advisor. For
more information, please visit our website at [Link]/workingwithus.

© UBS 2019. All rights reserved. The key symbol and UBS are among the registered and unregistered trademarks of UBS. UBS Financial Services Inc. is a subsidiary
of UBS AG. Member FINRA/SIPC.

UBS Financial Services Inc.

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