*Oaktree Financial Advisors is neither endorsed by nor affiliated with Eli Lilly
Eli Lilly has announced upcoming changes to The Lilly Employee 401(k) Plan. Effective July 1, 2013, the following investments will be replaced: U.S. Large Company S&P 500 – Index, U.S. Large Company Growth – Active, U.S. Large Company Value – Active, International Stock – Active, International Stock – Index, U.S. Small Company Stock – Active, U.S. Small Company Stock – Index.
The following six new options will be added: U.S. All Cap Equity – Active, U.S. All Cap Equity – Index, International Equity – Active, International Equity – Index, Real Assets, Fixed Income – Active.
The Lilly Stock Fund, Self-Directed Mutual Fund Window, Stable Income – Active and Target Date Portfolios will not change.
Beginning June 28 you can transfer money into the new options. If you make no changes by 4pm EDT on June 28, money in the old investments will automatically be transferred to the new options. Your future contributions will also transfer to the new options.
The current options will transfer as follows: U.S. Large Company Growth – Active, U.S. Large Company Value – Active, U.S. Small Company Stock – Active will transfer to U.S. All Cap Equity – Active.
U.S. Large Company S&P 500 – Index and U.S. Small Company Stock – Index will transfer to U.S. All Cap Equity – Index.
International Stock – Active will transfer to International Equity – Active
International Stock – Index will transfer to International Equity – Index.
The new U.S. All Cap Equity options include stocks of small, mid-size and large companies, while the investments being replaced included large and small companies. So the new options should provide some added diversification into mid cap stocks.
The International Equity options being replaced invest in developed countries other than the U.S.; mostly Europe, Asia and Australia. The International Equity investments being added will include emerging market countries like Brazil, Russia, India and China, as well as developed market countries. While emerging markets can be more volatile than developed markets, they can add diversification benefits to a portfolio.
A Real Assets option is being added. Real assets are generally considered to include any assets that have physical properties, such as energy and natural resources, real estate, basic materials, equipment, utilities and infrastructure, and commodities. These types of assets typically have a low correlation to stocks and bonds, thus adding diversification benefits.
Fixed Income – Active is a new option. It will invest in U.S. corporate and government bonds, high-yield bonds and emerging market debt. This should add the opportunity to diversify on the fixed-income side since prior to this option being added the only fixed income option was the Stable Income – Active.
The Self-Directed Mutual Fund Window allows participants to direct investments to fund(s) that they select. None of the changes that are happening July 1 will effect this option.
If you have questions about these changes to the plan or any other plan provisions, please call or email us.
Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.
Investments are subject to risk, including the loss of principal. Because investment return and principal value fluctuate, shares may be worth more or less than their original value. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions
Additional risks are associated with international investing, such as currency fluctuations,political and economic instability and differences in accounting standards.
Investing in emerging markets involves special considerations, such as risks related to market and currency volatility, adverse social and political developments, and the relatively small size and lesser liquidity of these markets.
High-yield securities tend to fluctuate more than higher rated securities, and are subject to numerous risks, including higher interest rates, economic recession, deterioration of the junk bond market, possible downgrades and defaults of interest and/or principal.
Commodities may be subject to greater volatility than investments in traditional securities. Investments in commodities may be affected by overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes and international economic and political developments.
Investing in real estate securities involves special risk, such as declines in the value of real estate and increased susceptibility to adverse economic or regulatory developments affecting the sector.
Securities issued by utility companies historically have been sensitive to interest rate changes. When interest rates fall, utility securities prices, and thus a utilities fund’s share price , tend to rise; when interest rates rise, their prices generally fall.
Investments in the natural resources sector involve special risks, including increased susceptibility to adverse economic and regulatory developments affecting the sector.
Investors should carefully consider a fund’s investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information, and can be obtained from your financial advisor. Please read the prospectus carefully.