Your Future Begins Today

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TABLE OF CONTENTS

2 Retirement takes planning 2 Why participate in a retirement

savings plan?

2 Sources of retirement income 3 Make time work for you 4 A case for starting now 6 The basics of investing 9 Enrolling in your plan is easy 9 Creating your own portfolio 10 Asset allocation questionnaire 11 Sample portfolio mixes —

asset allocation models 14 Glossary of terms 15 Morgan Stanley and you

Your employer has teamed with Morgan Stanley to provide you with a premium retirement savings program. What does this mean for you? It means access to:

• Asset management services from professionals recognized around the globe for their investment prowess.

• A broad array of investment choices.

• Intelligent financial education and asset allocation guidance provided locally by our trusted

Morgan Stanley Financial Advisors.

Whether you are participating in a 401(k) plan or another retirement savings program, Morgan Stanley provides you with the strength, resources and

investment expertise you need to help make your retirement dreams a reality.

Your Future Begins Today

A practical guide to retirement investing

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Look forward to

retirement ... plan ahead

RETIREMENT TAKES PLANNING What lifestyle are you looking forward to when you retire? Will you travel?

Volunteer your time? Exercise more? Or just relax? One thing is for sure — you’ll have plenty of time. But will you have enough money?

Planning for a comfortable retirement isn’t as easy as it was a generation ago. We’re living longer and tradi- tional company-sponsored pensions that provide lifetime income are more the exception than the rule.

Simply put, it’s up to you to make sure you have enough savings. Your best move? A long-term savings plan with the power to take you where you want to go.

WHY PARTICIPATE IN A RETIREMENT SAVINGS PLAN?

A retirement savings plan is a tax- deferred investment program offered through your employer. You may usually make contributions on a pretax basis, which can reduce the amount you will pay in income taxes in the current year. In addition, earnings on your investments grow tax-deferred.

That means you pay no federal income taxes on the money in your retirement savings account until you begin withdrawing it.

Why participate in a retirement savings plan?

It’s Easy.

Regular, predictable payroll deductions mean you can save money before you spend it. You choose how much to contribute (subject to certain limitations).

And you determine how to invest your contributions.

It’s Flexible.

Select or change your contribution amount, investment elec- tions or allocations as permit- ted by the plan. Your benefits are also portable, which means you can take the vested value of your account with you if you change jobs.

It’s Convenient

Contributions to your retirement plan are invested in your choice of mutual funds.

SOURCES OF RETIREMENT INCOME Many professionals suggest that you will need approximately 70% – 80%

of your current annual income each year in retirement to maintain a lifestyle similar to the one you have today.

Perhaps even more surprising, Social Security may account for less than 40%

of that income. Where will the rest come from? Typically, there are five main sources of retirement income:

1. Social Security benefits 2. Earnings

3. Asset income 4. Private pensions

5. Government employee pensions As shown in Figure 1, approximately half of your retirement income will have to come from private pensions, earnings and asset income.

* Fast Facts & Figures about Social Security, 2013.

36% Social Security 32% Earnings 11% Asset Income 9% Private pension

9% Government employee pension 3% Other

Figure 1

Sources of retirement income*

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MAKE TIME WORK FOR YOU

Many people feel they just can’t save for retirement. They have too many other pressing needs: mortgage or rent, credit card bills, tuition expenses, car payments. But the sooner you start, the longer you’ll have to build your savings for the retirement you want.

KEEP UP WITH INFLATION

As prices increase over time, you get less and less for your money. Your

“purchasing power” decreases. This increasing cost of living is known as inflation. Just as inflation affects purchasing power, it also erodes the value of investments. There are two things you can do to help protect your investments over time:

• Increase the amount you invest to keep up with inf lation. You may want to invest more in years of rising inflation.

• Consider investments that may beat inflation. Stocks have been the best performing asset class over the past 20 years, followed by bonds and then cash equivalents. Historically, however, there is more risk associated with stocks, especially over shorter periods of time. And of course, past performance of these investments does not guarantee future results.

TAKE ADVANTAGE

OF TAX-DEFERRED INVESTING When you invest in a tax-deferred account such as a 401(k) plan, you don’t pay income taxes on any earnings on your investments until you withdraw funds from the plan, which is likely to be years later. That means more of your money is invested — and is able to grow — over time. After a number of years, this can amount to a significant difference compared to an account whose earnings are taxed every year.

In addition, the money you contribute in a given year is deducted from your pay before your income taxes are determined. Because your taxable income is less, the amount of income tax you owe for that year may also be reduced.*

* Amounts you defer to your retirement plan are included in your gross income to cal- culate Social Security and Medicare taxes.

Thus, participating in your retirement plan will not reduce your Social Security benefits.

Not all state income taxes are reduced by pretax contributions into a 401(k) plan.

Please see a tax advisor in your state for more information.

The earlier you begin, the more your earnings can grow over time.

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STEVE AND DIANA ARE 25 YEARS OLD AND ARE JUST STARTING OUT IN THEIR CAREERS. Both earn $24,000 a year.

Steve decides to start investing just 5%

of his current salary ($100 a month) on a tax-deferred basis in his retirement plan.

Assuming that his plan investments earn 8% a year, compounded monthly, in 40 years he’ll have $349,101 in his account on contributions of only $48,000 ($100 × 12 months × 40 years).

Diana, on the other hand, chooses to

A case for starting now

Age 25 35 45 55 65

$400,000

$300,000

$200,000

$100,000 0

* This illustration does not take into account taxes due when assets are withdrawn from the tax-deferred account. The hypothetical returns are for illustrative purposes only and are not intended to represent any specific investment offered or made available by Morgan Stanley.

Returns on investments are not guaranteed and principal is not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other federal agency.

Figure 2*

Growth over time

Diana $149,036 Steve $349,101

wait until she is 35 to start investing.

She, too, decides to contribute $100 a month to her plan. Again, assuming 8% returns, she will have $149,036 when she reaches 65 on contributions of

$36,000 ($100 × 12 months × 30 years).

So, for the extra $12,000 that Steve contributes during his first 10 years in the plan, he’s made $200,065 more than Diana in earnings. And, if he increases his contribution amount over the years, he could earn even more.

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$16,176 $18,295 $44,913 $58,902 $95,962 $149,036 $186,648 $349,101 $251,353 40 years 30 years

20 years 10 years

$64,705 more than Andy

* For the purposes of this scenario, all earnings are taxed at 28%, regardless of the source of the earnings. The hypothetical returns are for illustrative purposes only and are not intended to represent any specific investment offered or made available by Morgan Stanley.

Returns on investments are not guaranteed and principal is not insured by the FDIC or any other federal agency.

Figure 3*

$100 a month at 8% in 28% tax bracket (Andy)

$100 a month at 8% tax-deferred (Pam) After-tax value of lump sum distribution (Pam) COMPARING PRETAX

AND AFTER-TAX INVESTING

Pam invests $100 in pretax earnings into her retirement savings plan each month, earning 8% a year compounded annually for 40 years. After 40 years her investment has grown to $349,101.

Andy chooses to invest $100 each month in a taxable investment, earning 8% a year compounded annually for the same 40-year period. Because

his investments are taxable, Andy is required to pay taxes every year on income received by his account. After 40 years, he has just $186,648.

As you can see in Figure 3,* even after Pam is taxed at withdrawal, she still has $251,353, which is $64,705 more than Andy. As this scenario suggests, the impact of choosing the pretax strategy — versus the after-tax — could be considerable over time.

Choosing a pretax investment strategy can make a considerable impact

over time.

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Share Price

0

$20

$40

$60

$80

$100

1 992 1 995 2000 2005 2012

Figure 4 The Up and Down Elevator Company good investment. If you had waited until 2007 to invest, you would have lost approximately 20% of your investment over the last five years. That’s a pretty big drop, especially if the investment was your life savings and you were planning to retire this year. You may not have time to recover from such a loss if you need the money now for retirement.

DIVERSIFY

One of the best ways to protect your retirement savings from short-term losses is through diversification. Many investments rise and fall at different times. If you spread your money over different asset classes — such as stocks, bonds and cash — losses in one investment could be offset with gains in others.

THE BASICS OF INVESTING

There are a number of factors you’ll need to consider as you structure your retirement portfolio.

CONSIDER YOUR TIME FRAME If you are many years away from retirement, you can probably afford to take some additional risk for potentially long-term growth. But if you’re go- ing to need your savings in just a few years, you may want to take a more cautious approach.

THE UP AND DOWN ELEVATOR COMPANY As you can see from the chart below, the value of this company has been up and down. Over the long term (1992 – 2012), it has made money and been a

KNOW YOUR TOLERANCE FOR RISK There is some risk involved in every- thing we do, including investing. There’s even risk in doing nothing — if you put all of your money under a mattress, it won’t keep pace with inflation, and it’s probably not insured for loss either.

Knowing your tolerance for risk — that is, how comfortable you are investing through market cycles that may produce negative returns — will help you determine the investment strategy that’s best for you.

DIFFERENT TYPES OF RISK

Inflation risk refers to the risk that your investment might not keep pace with inflation. For example, if you invest all of your money in an FDIC- insured bank savings account earning 3.5% a year, your principal would be insured against loss up to $250,000 (the standard maximum deposit insurance amount is currently $250,000 per depositor, per insured bank). But if inflation rises at 4% a year, your investment — although worth more in actual dollars — will be worth less in real terms because your purchasing power has gone down.

Market risk refers to the risk that a market may go down in value. There are all kinds of markets — stock market, bond market, market for fine art or even baseball cards. When you buy an item, you are hoping that the market price will rise (appreciate) in value. However, it may go down.

If you are investing for just a short period of time, the stock market has a high level of risk because prices can rise or fall quickly. But, historically, the market has gone up in value over the long term. Of course, the stock market’s past performance cannot be used to predict its future results.

Principal risk means that you might lose some of the money that you invest.

For example, a fixed-income investment, such as a bond, may not be able to repay principal at maturity.

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Diversification helps protect your retirement savings from short-term losses

Three general investment categories

Stocks represent a share of ownership in a company.

Bonds are loans or debt obligations by a company or government (or governmental agency).

Cash Equivalents are short-term debt obligations that can easily be converted to cash.

WHAT IS DOLLAR-COST AVERAGING?

Dollar-cost averaging is the disciplined strategy of investing a fixed amount of money on a regular basis over time.

You invest equal dollar amounts in securities — such as mutual fund shares — regardless of fluctuating price levels.

As a result, you buy more shares when the price goes down and fewer shares when the price goes up. This can result in a lower average cost per share compared to the average purchase price over the same period of time.

Dollar-cost averaging doesn’t assure a profit or protect against a loss when the market declines. Since dollar-cost averaging involves continual investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to continue your purchases through periods of low price levels.

Stocks, bonds and cash — the asset classes

THERE ARE THREE GENERAL CATEGORIES OF INVESTMENTS: stocks, bonds and cash equivalents. Understanding these basic asset classes — and their differences — is key to structuring your retirement plan.

Stocks represent a share of ownership in a company. The value of your shares may go up or down over time. Histori- cally, stocks have been the best performing of the asset classes,* although

there is more risk associated with them, especially on a short-term basis.

Bonds are loans or debt obligations by a company or government (or governmental agency). They are expected to pay interest to the investor at regular intervals (typically quarterly) in addition to repaying the principal at the date of maturity. Maturity dates can range from one to 40 years.

Historically, bonds have been less risky than stocks, but with a lower return on investment. However, bonds tend to be more sensitive to interest rate fluctuations. As rates rise, the value of bonds tends to fall, and vice versa.

Stocks and bonds often experience negative returns over short periods of time. But historically, these asset classes have generally produced posi- tive returns over longer time periods.

But keep in mind, past performance doesn’t guarantee future results.

Cash equivalents are short-term debt obligations that can easily be converted to cash. Cash equivalents include US Treasury bills, certificates of deposit and commercial paper. While they have the highest relative degree of safety in terms of risk to capital among the three asset classes, their returns may not keep up with inflation over the long term.

Most retirement plans do not provide direct investment into individual stocks, bonds and cash equivalents.

Instead, participants can invest in mutual funds, which invest in one or more of the basic asset classes.

* Past performance is no guarantee of future results.

Diversification neither assures a profit nor guarantees against loss in a declining market.

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Mutual funds

WHAT IS A MUTUAL FUND?

A mutual fund is an investment company that pools the money of many people (its shareholders) and invests it for them. When you invest in a mutual fund, you are actually purchasing shares in the fund. Mutual fund investments may include any or all of the three asset classes — stocks, bonds and cash equivalents. The value of the fund’s shares depends on the market value of the securities in the fund’s portfolio. Since the first mutual funds were introduced in 1924, they have become one of the most popular investments available.

WHAT THEY OFFER INVESTORS Professional management. Generally, one of the advantages of a mutual fund is that financial professionals, known as portfolio managers, buy and sell securities for the fund’s portfolio.

Many individual investors may not have the time, know-how or interest to study the markets and select individual securities on their own.

They can benefit from the portfolio manager’s resources, specialized knowledge and experience.

Built-in diversification. Diversifica- tion, as mentioned earlier, is one of the best ways to protect your portfolio from the impact of market swings and economic cycles. Because a mutual

fund may invest in dozens — or even hundreds — of different securities, your investment is automatically diversified.

Investment objectives that match your own. Your retirement plan offers a number of mutual funds from which to choose. Each fund invests in a variety of stocks, bonds or cash equivalents based on a defined objective.*

Whether your goal is to protect your principal or maximize the growth potential of your investments, you’ll find that most of your plan’s mutual funds are managed to meet one or more of these objectives.

The fund’s objective must be spelled out in a prospectus, which also contains other detailed information about the operation of the fund. You should read the prospectus carefully before investing in a fund.

* Please consider the investment objectives, risks, charges and expenses of any fund carefully before investing.

The prospectus contains this and other information about the fund.

To obtain a prospectus, contact your Morgan Stanley Financial Advisor.

Please read the prospectus carefully before investing.

When you invest in a mutual fund, you are actually purchasing shares in the fund.

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Plan for the retirement lifestyle you want

ENROLLING IN YOUR PLAN IS EASY Now that you’ve learned more about the realities of retirement and the basics of investing, you’re ready to plan for the retirement lifestyle you want.

Your company’s retirement plan may offer a wide range of investment options so that you can construct the kind of portfolio that best suits your needs.

Make sure you understand the different choices before you get started. The following section on creating your own portfolio will help you.

Enrollment material, including pro- spectuses for the mutual funds, will be made available to you during the enrollment presentation. You may also contact your company’s benefits manager.

CREATING YOUR OWN PORTFOLIO Every person has different investment goals. While your retirement plan may

offer a number of investment options that are considered suitable for retirement savings, neither Morgan Stanley nor your company can tell you exactly how much you should invest, or what specific investments to make.

How you allocate your assets can significantly impact your portfolio’s performance. No matter how far away you are from retirement, it is important to think about your long-term strategy. One of the best ways to plan for a comfortable retirement is by choosing the appropriate asset allocation mix, based on your risk tolerance and time horizon. The questions on the following pages are designed to assist you in understanding your attitude to- ward risk and return. Your results may help you consider an asset allocation strategy that best suits your long-term investment objectives.

Once you understand your willingness and ability to assume risk, you can create a plan that works for you.

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Please answer the following questions.

Circle your choice for each question.

1. IN GENERAL, WHAT TYPE OF INVESTOR ARE YOU?

A. I feel very comfortable with investment volatility, and I am willing to take more risk over longer periods of time to pursue maximum growth of my retirement investment.

B. I am comfortable with investment risk and have time to ride out the ups and downs in the market to help grow my money over time.

C. I am not comfortable with risk but I realize that I need to potentially increase the value of my retirement investment over time.

D. I am very uncomfortable with investment risk.

2. WHAT IS YOUR PRIMARY FINANCIAL GOAL?

A. Long-term wealth accumulation.

B. Retirement income.

C. Current income.

D. Wealth preservation or emergency savings.

3. IN THE LONG TERM, HOW WOULD YOU LIKE YOUR RETIREMENT INVESTMENTS TO PERFORM?

A. Far exceed the rate of inflation.

B. Exceed the rate of inflation.

C. Keep pace with inflation.

D. Concerned more about protecting the value of my principal than the effects of inflation.

Asset Allocation

Questionnaire 4. IF YOU COULD GREATLY INCREASE YOUR RETURN BY INCREASING YOUR RISK, WOULD YOU:

A. Take a great deal more risk with some or all of your money.

B. Take a little more risk with all of your money.

C. Take a little more risk with some of your money.

D. Not increase your risk at all.

5. WHICH SCENARIO DESCRIBES YOUR CAREER? DO YOU FORESEE THAT YOUR EARNINGS WILL:

A. Increase at a rate higher than inflation (new job, promotion, etc.) B. Increase at the same rate as inflation C. Remain about the same.

D. Decrease (retirement, change to part-time job, etc.)

6. APPROXIMATELY HOW MANY MORE YEARS DO YOU PLAN TO WORK UNTIL YOU RETIRE?

A. 30 years or more B. 16 to 30 years C. 6 to 15 years D. 5 years or fewer

7. DO YOU ANTICIPATE WITHDRAWING ANY MONEY FROM YOUR RETIREMENT PORTFOLIO (VIA A LOAN OR DUE TO RETIREMENT, ETC.)?

A. I do not intend to remove any money in the foreseeable future.

B. I intend to withdraw money within 10 years or more.

C. I intend to withdraw money within 5 to 10 years.

D. I intend to withdraw money within 5 years or fewer.

Scoring:

A = 4 points B = 3 points C = 2 points D = 1 point Total Score:

Match your score to the appropriate allocation models shown on the following page.

[ ]

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Model 1 – Conservative 7 – 10 Points Short-Time Horizon and / or

Lowest Risk Tolerance:

WHY THIS MIX? If you are already in retirement or generally risk adverse, a portfolio predominantly allocated towards bonds is more apt to help protect your principal while still allowing for moderate growth.

30% Stable Value / Money Market 51% Investment Grade Bonds 5% TIPS Bonds

9% US High Yield Bonds 5% Emerging Markets Bonds

MAY BE APPROPRIATE FOR INVESTORS WHO:

• Seek to preserve investment principal and maintain stability

• Are in retirement or generally risk adverse

• Want as little volatility as possible

Sample Portfolio Mixes — Asset Allocation Models

The following asset mixes are designed to provide the optimum level of risk and reward as balanced against the time you have until you retire. Obviously, the mix should be tailored according to your changing needs. When applying any asset allocation model to your retirement portfolio, you should consider your entire financial picture.

Model 2 – Conservative 11 – 13 Points Short-Time Horizon and / or

Low Risk Tolerance:

WHY THIS MIX? As you approach retirement, you may want to invest more conservatively. However, you should consider including some stocks as a part of your asset allocation for a more diversified portfolio and to help your portfolio keep pace with inflation.

7% US High Yield Bonds 3% Emerging Markets Bonds 16% US Large Cap Stocks 4% US Mid Cap Stocks 2% US Small Cap Stocks 6% International Stocks 3% Emerging Markets Stocks

• Seek to preserve investment principal and maintain stability, yet still need some growth

• Are close to retirement

• Want to reduce volatility

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Moderately Conservative Risk Tolerance:

WHY THIS MIX? If you still have a relatively long time before you retire and have a moderate risk tolerance, investing in stocks for long-term growth potential still makes sense; however, consider adding fixed income to help reduce your portfolio’s volatility.

6% US High Yield Bonds 3% Emerging Markets Bonds 20% US Large Cap Stocks 6% US Mid Cap Stocks 4% US Small Cap Stocks 8% International Stocks 4% Emerging Markets Stocks MAY BE APPROPRIATE FOR INVESTORS WHO:

• Seek capital appreciation and moderate levels of current income

• Can accept slightly higher risk

Moderate Risk Tolerance

• Can accept increased risk

Model 5 – Moderate 20 – 22 Points Medium-Time Horizon and / or

Moderate Risk Tolerance:

Model 6 – Moderate 23 – 24 Points Medium-Time Horizon and / or

Moderately Aggressive Risk Tolerance:

WHY THIS MIX? As your time horizon for retirement gets closer, your portfolio should be balanced between aggressive and conservative investments. A moderately aggressive portfolio will have a slightly higher allocation to more aggressive investments.

• Seek capital appreciation over the long term with a degree of stability provided by fixed income

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The asset allocation models are intended to be used as an additional information source for retirement plan participants making investment allocation decisions. Pursuant to Department of Labor Interpretive Bulletin 96-1, such models (taken alone or in conjunction with this document) do not constitute investment advice for purposes of the Employee Retirement Income Security Act (ERISA) and there is no agreement or understanding between Morgan Stanley, the Financial Advisor, the plan, any plan fiduciary or any plan participant under which the latter receives information, recommendations or advice concerning investments which are to be used as a primary basis for any investment decisions relating to the plan. Accordingly, neither Morgan Stanley nor any Financial Advisor is a fiduciary with respect to your plan for purposes of ERISA, or similar laws, except as otherwise agreed to in writing by Morgan Stanley. Following an asset allocation model does not assure a profit or guarantee that you will not incur a loss. Performance of the

Now that you have identified your investor type and asset allocation strategy, it’s time to take action.

Talk to your plan provider about how you can apply your asset allocation mix to your retirement portfolio. Keep in mind, asset allocation does not assure a profit or guarantee that you will not incur a loss.

individual models may fluctuate and will be influenced by many factors.

In applying particular asset allocation models to their individual situations, participants or beneficiaries should consider their other assets, income and investments (e.g., equity in a home, IRA investments, savings accounts and interests in other qualified and nonqualified plans) in addition to their interests in the plan.

The asset allocation models are based on the analysis of the Morgan Stanley Wealth Management Global Investment Committee (the “Committee”). The models represent the blend of asset classes identified by the Committee, subject to various allocation constraints, that it believes are best suited over time to seek to achieve maximum investment return for a given level of risk. It is possible that these asset allocation models will change based on changes in the economy. Be sure to periodically check with your employer to make sure you have the most current version of the models.

should favor stocks where earnings potential is greater over time, albeit at greater risk.

48% US Large Cap Stocks 12% US Mid Cap Stocks 10% US Small Cap Stocks 20% International Stocks 10% Emerging Markets Stocks

• Seek maximum capital appreciation

• Have a long time until retirement

• Will accept high risk and market volatility

objective would favor stocks where growth potential is greater over time, albeit at greater risk.

34% US Large Cap Stocks 16% US Mid Cap Stocks 18% US Small Cap Stocks 17% International Stocks 15% Emerging Markets Stocks

• Seek maximum capital appreciation

• Have a long time until retirement

• Can accept high risk and market volatility

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401(K) PLAN: A retirement savings plan that is sponsored by companies for their employees, which uses the tax- deferred or after-tax contributions and accumulated earnings to determine retirement benefits. It is named after the section of the Internal Revenue Code that created this type of plan.

ASSET: Something of value.

ASSET ALLOCATION: The strategy of diversifying investments among different asset classes (stocks, bonds and cash equivalents).

BONDS: Debt investments with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate.

CAPITAL: Wealth in the form of money or property.

CAPITAL APPRECIATION: The growth in the value of capital.

CASH (CASH EQUIVALENTS): Short-term securities such as US Treasury bills and certificates of deposit. Although cash-equivalent funds are not federally insured or guaranteed, they typically preserve the initial investment.

COMPOUNDING: Growth of an investment through earnings on earnings.

CORE BONDS: Higher-credit-quality corporate bonds as well as government securities seeking solid income and return potential. With broad ex- posure to the US bond market, these may also be a strong vehicle for investors seeking diversification to buf- fer the volatility of more aggressive investments.

DIVERSIFICATION: An investment strategy to lower risk by investing in more than one class or type of asset.

DIVIDEND: A payment from earnings to shareholders of a corporation or mutual fund.

DOLLAR-COST AVERAGING: A method of regular, periodic investing of a set amount in an investment option.

DOW JONES INDUSTRIAL AVERAGE:

(“DJIA”) An unmanaged index generally representative of the US stock market.

EARNINGS: The value of an investment over and above the principal amount invested. Also refers to dividends and interest paid by investment vehicles.

GROWTH AND INCOME FUND: A mutual fund that seeks both capital appreciation and income (interest or dividend payments).

GROWTH FUND: A mutual fund that has capital appreciation as its primary objective.

INCOME FUND: A mutual fund that has income from interest or dividends as its primary objective.

INFLATION: An increase in the market price of a good or service.

INTERNATIONAL STOCKS: Stocks of companies outside the United States.

Investments in foreign securities in- volve increased risk, such as currency rate fluctuations, foreign taxation and political changes.

INVESTMENT GRADE BOND FUNDS:

Mutual funds and exchange-traded funds that invest in municipal or corporate bonds that have a relatively low risk of default. Unlike high-yield bonds, investment grade bond credit quality as identified by the credit rating agency is considered high quality and lower risk.

LARGE CAP STOCKS: Generally defined as stocks of companies with a market capitalization of $10 billion or more.

These stocks are usually considered to be more stable than stocks of smaller companies.

LIQUIDITY: The ease with which something can be bought and sold.

MATURITY DATE: The date on which a debtor will pay back the creditor the principal and any remaining interest on a loan, such as a bond.

MID CAP STOCKS: Generally defined as stocks of companies with a market capitalization ranging from $1.5 billion to $10 billion. These stocks are generally considered to be more volatile than large caps.

MONEY MARKET FUND: A mutual fund that invests in cash equivalents.

MUTUAL FUNDS: Funds operated by investment companies that raise money from shareholders and invest it in stocks, bonds, options, futures, currencies or money market securities.

These funds offer diversification and professional management. All mutual funds are subject to market risk including the possible loss of principal.

Glossary of terms

A number of financial and investment terms may be unfamiliar to you. Here is a brief description of some of the most common terms with which you should become familiar.

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Morgan Stanley and you

Whatever lifestyle you’re looking forward to in retirement, rest assured you’ve taken a first step in getting there. Your employer has offered you a top retirement savings program through Morgan Stanley.

If you need help with any aspect of your retirement plan, speak to your plan’s Morgan Stanley Financial Advisor. We stand by our commitment to provide premium, personalized service as only a world-renowned financial services firm can.

tributed to a retirement plan that has been excluded from income for purposes of calculating current year income taxes.

PRINCIPAL: The original amount invested.

PROSPECTUS: The legal document that offers for sale shares of a mutual fund or other investment vehicle to the public. It contains important information about the investment being offered, including fees and expenses, along with the investment objectives and risks associated with the investment.

S&P 500: The Standard & Poor’s 500 Composite Stock Price Index. An index created by Standard & Poor’s of 500 of the largest publicly traded companies.

SECURITY: An instrument that indicates an ownership or creditorship interest.

SHAREHOLDER: An owner (holder) of shares in a mutual fund or stock.

Also called stockholder.

SMALL CAP STOCKS: Generally defined as stocks of relatively new companies

vehicle offered in a defined contribution plan that offers plan participants intermediate term returns and liquidity (subject to plan rules) with low market value risk. This is typically accomplished through a wrap contract or investment contract that guarantees the payment of plan- related benefits at book value (cost plus accrued interest) which enables the entire investment to be carried at its book value.

STOCKS: A type of security that sig- nifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.

Ownership is determined by the number of shares a person owns relative to the number of outstanding shares.

It is the residual corporate interest that bears the ultimate risks of loss and receives the benefits of success.

TA X- D E F E R R E D : An investment whose earnings are not assessed taxes immediately, but rather at some future time.

TREASURY BILL: A negotiable debt ob- ligation issued by the US government and backed by its full faith and credit, having a maturity of one year or less.

Exempt from state and local taxes. Also called Bill or T-Bill or US Treasury Bill.

TREASURY INFLATION PROTECTED SECURITIES: (“TIPS”) A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are backed by the US government and their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed.

VOLATILITY: Volatility refers to the amount of change in a security’s value.

The price of highly volatile securities can change dramatically over a short time period in either direction.

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LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors of any investments made under such plan or account.