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401(k) S OLUTIONS401(k) in FocusIn this issueQuarterlyMarket Updatefrom Fisher’sInvestmentPolicyCommitteeHow You InvestYour 401(k)Money Matters–Here are YourInvestingIngredientsFAQ Check—Ask aRetirementCounselorMay 2016

401(k) S OLUTIONSHow You InvestYour 401(k) MoneyMatters—Here are YourInvesting IngredientsIn baking, the difference between a cake that’s merelyedible and one that’s truly great is the ingredients and theirproportions. Similar rules apply in investing; selecting justthe right type of investments in the correct proportionscan mean the difference between just retiring, and retiringin the way you choose.Your basic investing ingredientsThe basic investment types are stocks, bonds, cash, andother securities. To keep things simple for this discussion,let’s stick with stocks and bonds.Stocks, also known as equities. A stock is an ownershipshare of a company, representing a claim on the company’sassets and earnings. 401(k) investors (like you) may ownstocks directly. But more commonly, they own stocksthrough mutual or collective funds. These funds pooltogether money from many investors to purchase shares ofa number of different companies. The stocks may be fromsmall companies, very large companies, utility companies,or some other category. The fund owns the shares, andinvestors purchase shares of the fund.Over time, stocks generally have higher investment returnsthan bonds. At the same time, they tend to experiencemore of the ups and downs of the markets. This is known2as volatility. It makes sense that stocks are volatile, becausejust as the economy and market factors change, companiesalso experience ups and downs. However, even thoughstocks may experience dramatic fluctuations in the shortterm, research shows that they tend to even out over thelong run.Bonds, also known as fixed income securities. You canthink of a bond as a loan you make to a government,corporation, or another entity. When you loan themthe money, they owe it back to you, plus interest. Bondcertificates are like IOUs. The borrower (also called theissuer) uses the certificate to tell you when the loan will berepaid and how much they will pay in interest. Bonds tendto be more stable than stocks, but also tend to have lowerinvestment returns.Generally, 401(k) plan investors put money into fixedincome securities by purchasing shares of a fixed incomemutual fund or collective fund, rather than purchasingindividual bonds.Putting them together—your assetallocationStocks and bonds perform differently depending oncurrent economic, political and sentiment-based marketdrivers. They may enjoy both highs and lows, which is whyit’s important to invest strategically and in alignment withyour retirement goals.MAY 2016

For the younger person who has a long time beforeretirement, a sensible allocation might include asignificant percentage of stocks with the expectationof high returns. It might also include a small portion ofbonds, to offset the volatility that comes with stocks. Anindividual with only a few years left until retirement mightchoose to reduce their stock allocation and increase theirbond holdings in order to smooth out volatility while stillbenefiting from potentially higher returns. There are manydifferent scenarios—these are just two possibilities. As anindividual’s personal circumstances change before, up to,and through retirement, so might the way they allocatetheir retirement money across different asset types.Asset allocation is a crucial part of your investing success.We believe the majority of an individual’s account return isrelated to their asset allocation decisions. Some investorsfeel confident in their ability to review investment optionsand select a menu that’s right for them. But what if youdon’t feel equipped (or inclined) to decide how to allocateyour retirement account? Good news: you don’t have todo it alone.Your plan provides you with access to the RetirementNavigator, an online tool that helps you zero in on anasset allocation that matches your unique goals andcircumstances. This tool can help you understand keyissues about your individual situation so you can makeinformed investment decisions for your retirement needs.In just about 20 minutes, it will educate you while leadingyou through a series of questions designed to get to theheart of your individual retirement goals and objectives.The Retirement Navigator is designed to provide anasset allocation using a mix of equities and fixed incomeinvestments that’s right for your individual circumstances.if you ever have any questions about asset allocation orthe Retirement Navigator, be sure to call the Fisher 401(k)Solutions Help Desk at 888-322-7586.Are you selecting ingredients that will help your retirementsucceed? Remember, the right blend of ingredients canmake a big difference. Now’s the time to make sure you’refollowing a recipe to retirement success.Fisher Investments 401(k) Solutions’ assetallocation model portfolios include:Fisher Investments 90% Equity 10% Fixed IncomeFisher Investments 70% Equity 30% Fixed IncomeFisher Investments 60% Equity 40% Fixed IncomeFisher Investments 50% Equity 50% Fixed IncomeFisher Investments 30% Equity 70% Fixed IncomeFor those who want to choose their ownmix, the following collective fund options areavailable:Fisher Investments All World Equity Collective FundFisher Investments US Fixed Income Collective FundFisher Investments Foreign Equity Collective FundFisher Investments US Equity Collective FundFisher Investments Emerging Markets EquityCollective FundPlease see an important disclosure about the FisherInvestments Collective Funds on page 8.As life changes come along, you can revisit the RetirementNavigator. Updating your information will help youdetermine if you’re still in the right allocation mix, or ifit’s time to make a change. The same applies to investorswho manage their own portfolios—change happens,and those changes may require changes in investments,too. A periodic review will help keep you on track. AndMAY 20163

401(k) S OLUTIONSQuarterly MarketUpdate from Fisher’sInvestment PolicyCommitteeonly if we forecast a bear market—a long, fundamentallydriven downtrend exceeding -20%. It takes a negativesurprise quashing trillions in economic activity to drivea bear market. We don’t see a sufficiently powerful,surprising negative lurking unnoticed to end the bullmarket right now.Global markets rallied in Q1’s second half, erasing anearly-year slide to finish the quarter down just slightly.While sharp downswings like January’s are uncomfortable,strong returns in late February and March show howquickly corrections can reverse, rewarding disciplinedinvestors. We believe stocks will keep rewarding disciplineas the bull market continues this year.2016 seems set to become the Year of Falling Uncertainty.The year began with huge uncertainty surrounding USelections, low oil prices, China, negative interest ratesand the UK’s looming “Brexit” vote on staying in the EU.None are disastrous, but combined they fueled massivefear. As these fears sunset and uncertainty falls, reliefshould boost stocks. Some, like the “Brexit” vote and USelections, have fixed expiration dates, which should bringinvestors more clarity, while others fade with time.The year’s early downturn may be over—it will only beclear in hindsight—but another correction later this yearis always possible. Corrections (short, sharp downturnsexceeding -10%) result from sentiment’s unpredictablewhims. They don’t operate on schedules, so the fact wejust had one doesn’t prevent another. In our view, thebest course of action when sharp downdrafts strike is tostay calm. It can be tempting to try to time correctionsfor fear they’ll fall further, but such moves often backfire,and can jeopardize your long-term goals through missedopportunity. We recommend reducing equity exposure4America’s election is seven months away and stillimpossible to handicap, but markets will steadily gainclarity. The field has narrowed. Hillary Clinton is the likelyDemocratic nominee, and the GOP is Donald Trump’sto lose. Yet events could derail either campaign, souncertainty persists. Most of this fog should dissipate byconvention season, giving markets fewer wild scenariosto fret and helping investors narrow their focus and pricein the outcome. On November 8, uncertainty evaporates,letting investors get on with life—a powerful positive.While politics are worth assessing, we believe it’s crucialto accept that no party is superior, and no candidateis automatically good or bad for markets. Politicsare emotional, and bias blinds—hence our politicalagnosticism. Markets have performed well and poorlyunder both Democrats and Republicans. Headlinesspeculate on whether Trump, Clinton, Bernie Sanders,Ted Cruz and the rest will be good or bad for markets—allbluster, no substance. Campaign rhetoric rarely becomeslaw, as presidents moderate or hit a Congressional brickwall. Moreover, stocks price all opinions, good and bad.MAY 2016

Fear will be baked in soon enough, allowing markets towarm to the eventual winner. The closer the election, themore markets will embrace the victor.Other lingering questions should similarlyfade. “Brexit” will be clear after the June23 referendum. If the UK stays in theEU, markets will likely cheer the statusquo. If it leaves, at least we’ll know,and after some uncertainty, marketswill see it isn’t the disaster mostpresume. Fears of China, negativerates and low oil prices lack fixed endIf you would like to learn more about the stock market orhave any questions or need assistance with your 401(k),we encourage you to contact your company’s FisherRetirement Counselor or call the Fisher 401(k)Solutions Help Desk at 866-322-7586.Asearningsand economicgrowth beat dourexpectations,uncertaintyshould fall.- The Investment Policy Committeedates but are either misinterpretedor small, and investors should get overthem soon enough. China is growing, notcollapsing. The Eurozone has had negativerates since June 2014, yet it has grown, with lendingand broad money growth improving. Energy earnings andinvestment have already fallen, but the detraction fromearnings will soon cease, making growth elsewhere moreapparent. As earnings and economic growth beat dourexpectations, uncertainty should fall.Soon investors will see plenty to cheer. The worldcontinues growing, powering profits in most sectors.Broad money supply growth has accelerated throughoutthe world. Central banking is flawed but not choking offgrowth. All augur well for capital markets and the globaleconomy. Politically, gridlock has escalated in much of thedeveloped world, reducing legislative risk. Annoying asthe in-fighting might be, stocks love it, as it reduces therisk of sweeping change creating winners and losers.The world is full of unseen positives, with extant negativestoo small or too widely known to wallop stocks. Investorsaren’t euphoric or complacent. Rather, expectations aretoo dour. This isn’t a time to be fearful. This is a time toappreciate what the uncertain masses miss and enjoy acontinued bull market.MAY 20165