,tnutnv zc+

tufnons sfntfrcv
srrcitt nrronf ctoett invrsfvrnf covviffrr
Global Investment
Committee
10 Investment Ideas for 2013
* Edward M. Kerschner is not an employee of Morgan Stanley Smith Barney. He is a paid consultant and a member of the Global Investment Committee. His opinions are solely his own and
me, nc nocosser||, rooc |cso c |crgen Sen|o, Sm|| |erno, cr |s en||eos.
T
he highly accommodative policy
stance being pursued by the Federal
Reserve, the European Central Bank
(ECB) and other central banks should
continue to bolster nancial markets in
2013 despite scal policy drag and another
year of subpar growth in
the global economy. The
Global Investment Com-
mittee (GIC) believes that
this backdrop is generally
good for equities and other
risk assets.
The Fed is engaged in
an open-ended round of
Quantitative Ease (QE),
purchasing longer-term
Treasury securities and
mortgage-backed securities in an ef-
fort to hold down interest rates and
improve nancial conditions and thus
foster a stronger economic expansion.
The ECB has put in place another type of
unconventional program called Outright
Monetary Transactions (OMT) designed
to backstop European nations sovereign
debt markets. Although the program
has not been activated, its existence
has signicantly reduced the threat of
sovereign debt defaults and a disruptive
breakup of the euro monetary union.
Meanwhile, to bolster lo-
cal growth, several other
central banks have eased
in recent months.
By holding interest rates
at exceptionally low levels,
central banks are induc-
ing investors to shift into
riskier, higher-yielding as-
sets. With policy rates at
nearly zeroand negative
in real (ination-adjusted)
termsthe returns from traditional safe-
haven investments for any reasonable
holding period will only be attractive
if there are outright declines in other
investment options. While such declines
are always a possibility, we do not assign
a high probability to them this year.
,rrr trrtrctfr
Chief Investment Officer
otvio otnsf, crt
Chief Investment Strategist
nrnntnoo confint, crt
Senior Equity Strategist
,onn oitton
Chief Municipal Bond Strategist
krvin rttntctn
Chief Fixed Income Strategist
rowtno v. krnscnnrn, crt*
Senior Strategy Consultant
,ontfntn vtcktv
Senior Fixed Income Strategist
cntntrs nrinntno
Deputy Chief Investment Officer
oouctts scninorwotr
Director of Tactical Asset Allocation
tnonrw stivvon
Head of Morgan Stanley Smith Barney Applied
Equity Advisors
vtnfvn suncuv
Chief Investment Officer
Morgan Stanley Private Wealth Management
Europe Middle East Africa
We tap the global
resources of
Morgan Stanley
to formulate the
best investment
ideas for the
coming year.
Follow us on Twitter
@MSWM_GIC
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Consequently, the tactical recom-
mendations in the GICs Asset Alloca-
tion Models, which have a 12-month
time horizon, overweight risk assets.
These tactical positions inform our
10-best investment ideas for 2013.
Indeed, five of our ideas come from
our tactical positions. We also have
looked outside of our standard asset
allocation framework for investment
opportunities that offer attractive at-
tributes fitting to the times.
The 10 Ideas for 2013
In light of the exceptionally low inter-
est rate environment, several of our
investment ideas once again target
high-quality income generation: divi-
dend aristocrats, investment grade
corporate bonds, high-quality mu-
nicipal securities and master limited
partnerships (MLPs). Three ideas are
designed to capitalize on the supe-
rior growth prospects in emerging
economies: emerging market (EM)
equities, local currency EM bonds,
and global gorillas. We continue to
favor the investment prospects for
watera finite resource that is not
always available where it is needed.
We also have retained US large-cap
growth stocks. Finally, in light of the
liquidity that central banks are pump-
ing into the banking system, we have
added commodities and gold to our list.
Here is a discussion of each idea.
The order is not indicative of prefer-
ence. We start with the new additions
to the list:
COMMODITIES AND GOLD. Against
a backdrop of slowing growth in
most EM economies, broadly speak-
ing, the performance of commodi-
ties has significantly trailed that
of other risk assets during the past
year. Looking forward, growth in EM
economies seems likely to acceler-
ate in response to policy-easing steps
taken during the past several months.
Economic activity in EM economies
tends to be more resource intensive
than in developed economies, so a
pickup in EM growth bodes well for
commodity demand.
With regard to gold, the accom-
modative policy stance of the worlds
major central banks seems likely to
continue to fuel concerns about future
inflation and currency debasement.
This, in turn, should spur investment
demand for gold.
We also note that previous rounds
of QE appear to have given a lift to
commodities, particularly gold and
other precious metals; QE3 should
do the same. Our benchmark for this
investment idea is a 50/50 split be-
tween the Dow Jones-UBS Commod-
ity Total Return Index and the spot
price of gold.
EMERGI NG MARKET BONDS. The
potential for high total returns from
fixed income securities in 2013 seems
limited in light of the low starting level
of interest rates. That said, EM bonds
are one of the more attractive bond
sectors. This asset class has undergone
a rerating during the past several years
because of improvement in the under-
lying credit quality of the sovereign
issuers. Indeed, more than 60% of the
issues in the Citi Emerging Sovereign
Bond Index carry an investment grade
rating, compared with only about 30% a
decade ago. Consequently, yield spreads
over comparable Treasury securities
have been trending downward. Current
spreads are a bit above that declining
trend line. We encourage investors to
seek vehicles that provide exposure
to local-currency-denominated bonds
(unhedged), as we expect currency
Figure 1: Our Best Ideas
for 2013
Clven our vlew LhaL Lhls year wlll be a good
one or rlsk asseLs ln general and equlLles
ln parLlcular, here are our besL lnvesLmenL
ldeas and Lhe benchmarks we wlll use Lo
Lrack Lhem.
1
Commodities and Gold
S0%/S0% spllL beLween Lhe Dow
ones-US CommodlLy ToLal ReLurn
lndex and Lhe spoL prlce o gold
2
Emerging Markets Bonds
l Morgan Lmerglng MarkeL ond
lndex, local currency, unhedged
3
US Large-Cap Growth
Russell !000 CrowLh lndex
4
Dividend Aristocrats
S&l S00 Dlvldend ArlsLocraLs lndex
5
Global Gorillas
S&l Clobal !00 lndex
6
Emerging Markets Equities
MSCl Lmerglng MarkeLs lndex
7
Investment Grade Credit
arclays CaplLal US AggregaLe
CorporaLe lndex
8
High-Quality Municipal Bonds
arclays CaplLal AMT-lree
lnLermedlaLe ConLlnuous
Munlclpal lndex
9
Water
lSL WaLer lndex
10
Master Limited Partnerships
Alerlan MLl lndex
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appreciation to provide a boost to to-
tal return. Our benchmark is the JP
Morgan Emerging Market Bond Index
(local currency, unhedged).
Here are the eight ideas that carry
over from 2012:
DIVIDEND ARISTOCRATS. With money-
market interest rates and traditional safe-
haven bond yields likely to remain near
record lows, dividend-paying equities
should continue to provide an attractive
alternative for income-seeking inves-
tors. We prefer large-cap, blue-chip
companies that have consistently raised
dividend payouts for several years. Our
benchmark is the S&P 500 Dividend
Aristocrats Index.
INVESTMENT GRADE CREDIT. The per-
sistence of low interest rates and rising
stock values has further strengthened
corporate balance sheets. Thus, invest-
ment grade corporate bonds continue to
oer an attractive combination of yields
that are higher than those on traditional
safe havens, such as US Treasuries, and
high credit quality. Our benchmark is
the Barclays Capital US Aggregate
Corporate Index.
HIGH-QUALITY MUNICIPAL BONDS. The
return of the 39.6% US income tax rate
should underpin demand for tax-exempt
municipal bonds. However, we do have
concerns over how possible tax reform
could impact the market.
In light of the outlook for subpar eco-
nomic growth, which will continue to
strain state and local government -
nances, we favor high quality (rated
mid-A or better) general-obligation and
essential-service revenue bonds rated
mid-BBB or better with maturities of
ve to 11 years. In addition, prerefunded
muni bonds selling at yields higher than
corresponding US Treasuries are also
compelling. Our benchmark is the Bar-
clays Capital AMT-Free Intermediate
Continuous Municipal Index.
MASTER LIMITED PARTNERSHIPS. Master
limited partnershipslimited partnerships
that trade on a securities exchangeoer
the tax benets of the limited-partnership
structure and the liquidity of publicly
traded securities. MLPs are concentrated
in natural-resource industries such as
oil, natural gas and minerals extraction.
They are attractive to income-seeking
investors, as they typically oer dividend
yields that are considerably above those
on conventional equity investments. As
with real estate investment trusts, MLPs
have a special status in the US tax code:
To avoid state and federal corporate
income taxes they must generate and
pay out 90% of their income from pro-
ducing, transporting and/or processing
natural resources. Our benchmark is
the Alerian MLP Index.
EMERGING MARKET EQUITIES. Emerging
market economies are on much better
footing than their developed-market
counterparts, due to growing middle-class
consumer sectors that support domestic
demand. Many EM countries do not face
the debt overhangs that are limiting
policy exibility in many developed
2012 Performance Review
Despite persistent markdowns in the estimates for economic growth and corporate earnings, risk assets per-
formed surprisingly well during 2012, as increasingly accommodative monetary policy facilitated a decoupling
from the challenging fundamental backdrop. Our top performer for 2012 was one of our thematic ideas: water
(up 27.8%all performance is on a total return basis). Our equity-related ideas generally posted strong gains
led by emerging markets equities (up 19.1%), dividend aristocrats (up 16.9%), US large-cap growth (up 15.3%),
and global gorillas (up 13.4%).
Three of our ideas designed to provide high-quality income generation in a low interest rate environment
delivered solid results: investment grade corporate bonds (up 9.8%), high-quality municipal bonds (up 6.8%)
and master limited partnerships (up 4.8%).
Our laggards were the more defensive ideas that reflected our concern in early 2012 that policy disar ray on
both sides of the Atlantic had tipped the Euro Zone in to a recession, with the US soon to follow: short duration
bonds (up 1.4%) and managed futures (down 2.1%).
Note: These performance results are based on benchmark indexes, actual performance may have varied based upon
the specic investment vehicles employed. All returns are reported as of Dec. 31, 2012 in US dollars, except for managed
futures, which is reported for the 12 months between Nov. 30, 2011 and Nov. 30, 2012 (See Figure 2, page 4).
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countries. Indeed, policymakers in many
EM countries have been gradually utiliz-
ing their latitude to make both scal and
monetary policy changes that bolster
domestic demand. Looking forward,
growth in EM economies seems likely
to accelerate in lagged response to the
policy-easing steps taken during the
past several months. Our benchmark
is the MSCI Emerging Markets Index.
GLOBAL GORILLAS. We believe that
investing in large, DM companies with
outsized exposure to the emerging
marketswe call them global gorillas
is another way to capture the growth
from economies that expect to account
for about 80% of global growth this year.
One way to capitalize on that growth is
via established multinationals that have
strong businesses in countries with a
rapidly expanding middle classsuch
as China, India and Brazil, all of which
are likely to experience rapid growth
in consumer spending in the next sev-
eral years. Our benchmark is the S&P
Global 100 Index.
US LARGE-CAP GROWTH STOCKS. This
idea incorporates our preferences
within US equities in terms of mar-
ket capitalization and style. As with
the global gorillas, large-cap stocks
are better-positioned to benefit from
established sales channels in emerg-
ing markets. Moreover, from a valu-
ation perspective, large-cap stocks
appear historically cheap relative to
mid-and small-cap stocks. Similarly,
by historical standards, growth stocks
appear cheap relative to value stocks.
Furthermore, during periods when
corporate earnings growth is scarce,
growth stockscompanies that can
deliver relatively stable earnings growth
regardless of the economic backdrop or
those that can generate above-average
earnings growthtypically outperform.
Our benchmark is the Russell 1000
Growth Index.
WATER. Water may be the most im-
portant commodity story of the 21st
century as declining supply and rising
demand combine to create the perfect
storm. Current global water-usage levels
are unsustainable. While the scarcity
of freshwater is most acute in Africa
and western Asia, scarcity also has be-
come an economic constraint in major
economies such as China, India and
Indonesia, as well as in the commercial
centers of Australia and the western
US. Indeed, urbanization may cause the
demand for water to increase ve-fold
beyond the essential water requirement
needed for personal hygiene, cooking
and cleaning. Moreover, this does not
include water used in power generation
or other industrial activities that typi-
cally accompany urbanization. Finally,
climate change is shrinking the avail-
able supply. In the face of progressively
growing demand for water, companies
are investing in ways to increase wa-
ter availability. Our benchmark is the
ISE Water Index.
Figure 2: A Recap of 2012s
Best Ideas
ResulLs may vary dependlng on Lhe
sLraLegles used. lrom Dec. J!, 20!! Lhrough
Dec. J!, 20!2, Lhe LoLal reLurn on Lhe MSCl
All CounLry World lndex was !6.8%, Lhe
arclays CaplLal Clobal AggregaLe ond
lndex, 4.0%, and US Treasury bllls, 0.8%.
Total Return (%)*
1
Water
lSL WaLer lndex 27.8
2
Emerging Markets Equities
MSCl Lmerglng MarkeLs lndex !9.!
3
Dividend Aristocrats
S&l S00 Dlvldend
ArlsLocraLs lndex !6.9
4
US Large-Cap Growth
Russell !000 CrowLh lndex !S.J
5
Global Gorillas
S&P Global 100 Index !J.4
6
Investment Grade Credit
arclays CaplLal US AggregaLe
CorporaLe lnvesLmenL Crade lndex 9.8
7
High-Quality Municipal bonds
arclays CaplLal AMT-lree
lnLermedlaLe ConLlnuous
Munlclpal lndex 6.8
8
Master Limited Partnerships
Alerlan MLl lndex 4.8
9
Short-Duration Bonds
arclays CaplLal Clobal Treasurys
! Lo J years lndex !.4
10
Managed Futures
CASAM ClSDM CTA
Lqual-WelghLed lndex -2.!**
*Dec. 3l, 20ll Lo Dec. 3l, 20l2
**Nov. 30, 20ll Lo Nov. 30, 20l2
Source. loomberg as o Dec. 3l, 20l2
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lndex Dehn|t|cns
cow ouzs-ues totnt
aztuau couuoctv
uczx This index
comprises the total return
from futures contracts on
19 physical commodities.
These include energy,
industrial metals,
precious metals and
agricultural commodities.
r uoacnu zuzacuc
unaxzt eouc uczx
This index includes
local-currency bonds
from 27 emerging market
countries.
sar see cvczuc
nastocants uczx
This equal-weighted
index measures the
performance of large-
cap, blue-chip companies
within the S&P 500
Index that have followed
a policy of increasing
dividends every year for
at least 25 years.
enactnvs cnrtnt us
nccazcntz coaroantz
uvzstuzut cancz
uczx This index
represents securities that
are investment grade,
SEC-registered, taxable
and dollar-denominated.
enactnvs cnrtnt nut-
razz utzauzcntz
coutuuous uuucrnt
uczx This is a market-
value-weighted index
designed to replicate
the price movements of
medium-duration bonds
with a nominal maturity
of six to 17 years.
ntzanu utr uczx
This index is a oat-
adjusted, capitalization-
weighted index of the
50 most prominent
energy master limited
partnerships.
usc zuzacuc
unaxzts uczx This
is a free-oat-adjusted,
market-capitalization
index designed to
measure equity market
performance in the global
emerging markets.
sar ctoent ee
uczx This market-
capitalization-weighted
index includes 100 large-
cap companies whose
businesses are global in
nature and that derive
a substantial portion of
their operating income,
assets and employees from
multiple countries.
aussztt eee caowtn
uczx This index
measures the performance
of the Russell 1000
companies with higher
price-to-book ratios and
higher forecasted
growth rates.
sz wntza uczx This
index comprises securities
that derive a substantial
portion of their revenues
from the potable water
and wastewater industry.
The index uses a modied
market-capitalization-
weighted methodology
to create a more uniform
weight distribution.
usc ntt couutav
woatc uczx This is
a free-oat-adjusted
market-capitalization
index that is designed to
measure equity-market
performance in the
developed and emerging
markets.
enactnvs cnrtnt
ctoent nccazcntz
eouc uczx This index
measures a wide spectrum
of global governments,
government-related
agencies and corporate
and securitized xed
income investments.
enactnvs cnrtnt
ctoent taznsuav -z
vznas uczx This index
tracks the xed-rate local
currency government
debt of investment grade
countries.
cnsnu/cscu ctn
zqunt wzcntzc uczx
This index reects the
average performance
of commodity trading
advisors (CTAs) reporting
to the CISDM Hedge
Fund/CTA Database. In
order to be included in the
equally weighted index
universe, a CTA must have
at least $500,000 under
management and at least
a 12-month track record.
The index, which goes
back to 1980, is calculated
using net performance and
net asset value.
srrcitt nrronf / ctoett invrsfvrnf covviffrr
6 vonctn sftntrv svifn etnnrv l ,tnutnv zc+
Disclosures
This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other
nnenc|e| |nsrumon cr c per|c|peo |n en, red|ng sreog,. ||s |s nc e rosoerc| ropcr end ves nc properod |, |o |osoerc| |opermons c |crgen Sen|o,
& Co. Incorporated or Citigroup Global Markets Inc. The views and opinions contained in this material are those of the author(s) and may differ materially from
|o v|ovs end cp|n|cns c c|ors e |crgen Sen|o, Sm|| |erno, ||C cr en, c |s en||eo ccmpen|os. |es porcrmenco |s nc nocosser||, e gu|do c uuro
porcrmenco. ||oeso roor c |mpcren |ncrme|cn, d|sc|csuros end que||nce|cns e |o ond c ||s meor|e|.
|o eu|cr,s) ,| en, eu|crs ero ncod) pr|nc|pe||, rospcns|||o cr |o propere|cn c ||s meor|e| roco|vo ccmponse|cn |esod upcn ver|cus eccrs, |nc|ud|ng
que||, end eccurec, c |o|r vcr|, nrm rovonuos ,|nc|ud|ng red|ng end cep|e| mer|os rovonuos), c||on ood|ec| end ccmpo||vo eccrs. |crgen Sen|o,
Sm|| |erno, |s |nvc|vod |n men, |us|nossos |e me, ro|eo c ccmpen|os, socur||os cr |nsrumons mon|cnod |n ||s meor|e|.
||s meor|e| |es |oon properod cr |ncrme|cne| purpcsos cn|, end |s nc en cor c |u, cr so|| cr e sc||c|e|cn c en, cor c |u, cr so|| en, socur|,/|nsrumon,
or to participate in any trading strategy. Any such offer would be made only after a prospective investor had completed its own independent investigation of the
socur||os, |nsrumons cr rensec|cns, end roco|vod e|| |ncrme|cn | roqu|rod c me|o |s cvn |nvosmon doc|s|cn, |nc|ud|ng, v|oro epp||ce||o, e rov|ov c en,
offering circular or memorandum describing such security or instrument. That information would contain material information not contained herein and to which
prcspoc|vo per|c|pens ero roorrod. ||s meor|e| |s |esod cn pu|||c |ncrme|cn es c |o spoc|nod deo, end me, |o se|o |oroeor. Wo |evo nc c|||ge|cn c o||
,cu v|on |ncrme|cn |oro|n me, c|engo. Wo me|o nc roprosone|cn cr verren, v|| rospoc c |o eccurec, cr ccmp|oonoss c ||s meor|e|. |crgen Sen|o,
Smith Barney has no obligation to provide updated information on the securities/instruments mentioned herein.
The securities/instruments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend
cn en |nvoscrs |nd|v|due| c|rcumsencos end c|joc|vos. |crgen Sen|o, Sm|| |erno, roccmmonds |e |nvoscrs |ndopondon|, ove|ueo spoc|nc |nvosmons
end sreog|os, end onccuregos |nvoscrs c soo| |o edv|co c e nnenc|e| edv|scr. |o ve|uo c end |nccmo rcm |nvosmons me, ver, |oceuso c c|engos
|n |noros reos, cro|gn oxc|engo reos, doeu| reos, prope,mon reos, socur||os/|nsrumons pr|cos, mer|o |ndoxos, cpore|cne| cr nnenc|e| ccnd||cns c
companies and other issuers or other factors. Estimates of future performance are based on assumptions that may not be realized. Actual events may differ from
those assumed and changes to any assumptions may have a material impact on any projections or estimates. Other events not taken into account may occur and
me, s|gn|ncen|, eoc |o prcjoc|cns cr os|meos. Core|n essump|cns me, |evo |oon medo cr mcdo||ng purpcsos cn|, c s|mp||, |o prosone|cn end/cr
ce|cu|e|cn c en, prcjoc|cns cr os|meos, end |crgen Sen|o, Sm|| |erno, dcos nc roproson |e en, suc| essump|cns v||| rooc ecue| uuro ovons.
Acccrd|ng|,, |oro cen |o nc essurenco |e os|meod rourns cr prcjoc|cns v||| |o roe||zod cr |e ecue| rourns cr porcrmenco rosu|s v||| nc meor|e||,
differ from those estimated herein.
This material should not be viewed as advice or recommendations with respect to asset allocation or any particular investment. This information is not intended
c, end s|cu|d nc, crm e pr|mer, |es|s cr en, |nvosmon doc|s|cns |e ,cu me, me|o. |crgen Sen|o, Sm|| |erno, |s nc ec|ng es e nduc|er, undor o||or
|o |mp|c,oo |o|romon |nccmo Socur|, Ac c 9~, es emondod cr undor soc|cn ~9b c |o |norne| |ovonuo Ccdo c 98C es emondod |n prcv|d|ng
this material.
Morgan 5tanley 5mth arney and ts aIhlates do not render advce on tax and tax accountng matters to clents. Ths materal was not ntended or wrtten
to be used, and t cannot be used or reled upon by any recpent, Ior any purpose, ncludng the purpose oI avodng penaltes that may be mposed on
the taxpayer under U.5. Iederal tax laws. Lach clent should consult hs/her personal tax and/or legal advsor to learn about any potental tax or other
mplcatons that may result Irom actng on a partcular recommendaton.
|norne|cne| |nvos|ng one||s groeor r|s|, es vo|| es groeor pcon|e| roverds ccmperod c U.S. |nvos|ng. |oso r|s|s |nc|udo pc|||ce| end occncm|c uncore|n|os
c cro|gn ccunr|os es vo|| es |o r|s| c curronc, ucue|cns. |oso r|s|s ero megn|nod |n ccunr|os v|| omorg|ng mer|os, s|nco |oso ccunr|os me, |evo
relatively unstable governments and less established markets and economies.
|esor ||m|od |ernors||ps ,|||s) ero ||m|od pernors||ps cr ||m|od ||e||||, ccmpen|os |e ero exod es pernors||ps end v|cso |noross ,||m|od pernors||p
un|s cr ||m|od ||e||||, ccmpen, un|s) ero redod cn socur||os oxc|engos |||o s|eros c ccmmcn scc|. Curron|,, mcs |||s cporeo |n |o onorg,, neure|
roscurcos cr roe| oseo soccrs. |nvosmons |n ||| |noross ero su|joc c |o r|s|s gonore||, epp||ce||o c ccmpen|os |n |o onorg, end neure| roscurcos
soccrs, |nc|ud|ng ccmmcd|, pr|c|ng r|s|, supp|, end domend r|s|, dop|o|cn r|s| end oxp|cre|cn r|s|.
A|orne|vo |nvosmons v||c| me, |o rooroncod |n ||s ropcr, |nc|ud|ng pr|veo oqu|, unds, roe| oseo unds, |odgo unds, menegod uuros unds, end
unds c |odgo unds, pr|veo oqu|,, end menegod uuros unds, ero spocu|e|vo end one|| s|gn|ncen r|s|s |e cen |nc|udo |cssos duo c |ovoreg|ng cr c|or
spocu|e|vo |nvosmon prec|cos, |ec| c ||qu|d|,, vc|e|||, c rourns, rosr|c|cns cn rensorr|ng |noross |n e und, pcon|e| |ec| c d|vors|nce|cn, e|sonco end/
cr do|e, c |ncrme|cn rogerd|ng ve|ue|cns end pr|c|ng, ccmp|ox ex srucuros end do|e,s |n ex ropcr|ng, |oss rogu|e|cn end ||g|or oos |en muue| unds
end r|s|s esscc|eod v|| |o cpore|cns, porscnno| end prccossos c |o edv|scr.
|nvos|ng |n ccmmcd||os one||s s|gn|ncen r|s|s. Ccmmcd|, pr|cos me, |o eocod |, e ver|o, c eccrs e en, |mo, |nc|ud|ng |u nc ||m|od c, ,|) c|engos |n
supp|, end domend ro|e|cns||ps, ,||) gcvornmone| prcgrems end pc||c|os, ,|||) ne|cne| end |norne|cne| pc|||ce| end occncm|c ovons, ver end orrcr|s ovons,
,|v) c|engos |n |noros end oxc|engo reos, ,v) red|ng ec|v||os |n ccmmcd||os end ro|eod ccnrecs, ,v|) pos||onco, oc|nc|cg|ce| c|engo end voe|or, end ,v||)
|o pr|co vc|e|||, c e ccmmcd|,. |n edd||cn, |o ccmmcd||os mer|os ero su|joc c ompcrer, d|scr|cns cr c|or d|srup|cns duo c ver|cus eccrs, |nc|ud|ng
|ec| c ||qu|d|,, per|c|pe|cn c spocu|ecrs end gcvornmon |norvon|cn.
||,s|ce| proc|cus moe|s ero ncnrogu|eod prcducs. |roc|cus moe|s ero spocu|e|vo |nvosmons, v||c| me, oxpor|onco s|crorm end |cng orm pr|co
vc|e|||,. |o ve|uo c proc|cus moe|s |nvosmons me, ucueo end me, epproc|eo cr doc||no, dopond|ng cn mer|o ccnd||cns. | sc|d |n e doc||n|ng mer|o,
|o pr|co ,cu roco|vo me, |o |oss |en ,cur cr|g|ne| |nvosmon. Un|||o |cnds end scc|s, proc|cus moe|s dc nc me|o |noros cr d|v|dond pe,mons. |orocro,
proc|cus moe|s me, nc |o su|e||o cr |nvoscrs v|c roqu|ro curron |nccmo. |roc|cus moe|s ero ccmmcd||os |e s|cu|d |o seo|, scrod, v||c| me,
|mpcso edd||cne| ccss cn |o |nvoscr. |o Socur||os |nvoscr |rcoc|cn Ccrpcre|cn ,S||C) prcv|dos core|n prcoc|cn cr cuscmors ces| end socur||os
|n |o ovon c e |rc|orego nrms |en|rupc,, c|or nnenc|e| d|ncu||os, cr | cuscmors essos ero m|ss|ng. S||C |nsurenco dcos nc epp|, c proc|cus moe|s
or other commodities.
|cnds ero su|joc c |noros reo r|s|. W|on |noros reos r|so, |cnd pr|cos e||, gonore||, |o |cngor e |cnds meur|,, |o mcro sons||vo | |s c ||s r|s|.
|cnds me, e|sc |o su|joc c ce|| r|s|, v||c| |s |o r|s| |e |o |ssuor v||| rodoom |o do| e |s cp|cn, u||, cr per|e||,, |ocro |o sc|odu|od meur|, deo.
|o mer|o ve|uo c do| |nsrumons me, ucueo, end prccoods rcm se|os pr|cr c meur|, me, |o mcro cr |oss |en |o emcun cr|g|ne||, |nvosod cr |o
meur|, ve|uo duo c c|engos |n mer|o ccnd||cns cr c|engos |n |o crod| que||, c |o |ssuor. |cnds ero su|joc c |o crod| r|s| c |o |ssuor. ||s |s |o r|s|
|e |o |ssuor m|g| |o une||o c me|o |noros end/cr pr|nc|pe| pe,mons cn e |mo|, |es|s. |cnds ero e|sc su|joc c ro|nvosmon r|s|, v||c| |s |o r|s| |e
principal and/or interest payments from a given investment may be reinvested at a lower interest rate.
|cnds reod |o|cv |nvosmon gredo me, |evo spocu|e|vo c|erecor|s|cs end proson s|gn|ncen r|s|s |o,cnd |cso c c|or socur||os, |nc|ud|ng groeor crod|
r|s| end pr|co vc|e|||, |n |o soccnder, mer|o. |nvoscrs s|cu|d |o cerou| c ccns|dor |oso r|s|s e|cngs|do |o|r |nd|v|due| c|rcumsencos, c|joc|vos end r|s|
c|orenco |ocro |nvos|ng |n ||g|,|o|d |cnds. ||g| ,|o|d |cnds s|cu|d ccmpr|so cn|, e ||m|od pcr|cn c e |e|encod pcrc||c.
|r|nc|pe| |s rournod cn e mcn||, |es|s cvor |o ||o c e mcrgego|ec|od socur|,. |r|nc|pe| prope,mon cen s|gn|ncen|, eoc |o mcn||, |nccmo sroem end
|o meur|, c en, ,po c ||S, |nc|ud|ng senderd ||S, C|Os end |cor, |cnds. Y|o|ds end evorego ||vos ero os|meod |esod cn prope,mon essump|cns
end ero su|joc c c|engo |esod cn ecue| prope,mon c |o mcrgegos |n |o undor|,|ng pcc|s. |o |ovo| c prod|ce||||, c en ||S/C|Os evorego ||o, end
|s mer|o pr|co, doponds cn |o ,po c ||S/C|O c|ess purc|esod end |noros reo mcvomons. |n gonore|, es |noros reos e||, prope,mon spoods ero |||o|,
c |ncroeso, |us s|cron|ng |o ||S/C|Os evorego ||o end |||o|, ceus|ng |s mer|o pr|co c r|so. Ccnvorso|,, es |noros reos r|so, prope,mon spoods ero |||o|,
c docroeso, |us |ong|on|ng evorego ||o end |||o|, ceus|ng |o ||S/C|Os mer|o pr|co c e||. Scmo ||S/C|Os me, |evo cr|g|ne| |ssuo d|sccun ,O||). O||
cccurs | |o ||S/C|Os cr|g|ne| |ssuo pr|co |s |o|cv |s seod rodomp|cn pr|co e meur|,, end rosu|s |n |mpuod |noros |e mus |o ropcrod ennue||, cr
ex purpcsos, rosu||ng |n e ex ||e||||, ovon |cug| |noros ves nc roco|vod. |nvoscrs ero urgod c ccnsu| |o|r ex edv|scrs cr mcro |ncrme|cn.
|noros cn mun|c|pe| |cnds |s gonore||, oxomp rcm odore| |nccmo ex, |cvovor, scmo |cnds me, |o su|joc c |o e|orne|vo m|n|mum ex ,A|). ,p|ce||,,
seo exoxomp|cn epp||os | socur||os ero |ssuod v|||n cnos seo c ros|donco end, | epp||ce||o, |cce| exoxomp|cn epp||os | socur||os ero |ssuod v|||n
ones city of residence.
A exe||o oqu|ve|on ,|o|d |s cn|, cno c men, eccrs |e s|cu|d |o ccns|dorod v|on me||ng en |nvosmon doc|s|cn. |crgen Sen|o, Sm|| |erno, end |s
||nenc|e| Adv|scrs dc nc cor ex edv|co, |nvoscrs s|cu|d ccnsu| |o|r ex edv|scrs |ocro me||ng en, exro|eod |nvosmon doc|s|cns.
roesur, |ne|cn |rcoc|cn Socur||os ,||S) ccupcn pe,mons end undor|,|ng pr|nc|pe| ero eucme|ce||, |ncroesod c ccmponseo cr |ne|cn |, rec||ng |o
ccnsumor pr|co |ndox ,C||). W|||o |o roe| reo c rourn |s guerenood, ||S ond c cor e |cv rourn. |oceuso |o rourn c ||S |s ||n|od c |ne|cn, ||S me,
s|gn|ncen|, undorporcrm vorsus ccnvon|cne| U.S. roesur|os |n |mos c |cv |ne|cn.
|qu|, socur||os me, ucueo |n rospcnso c novs cn ccmpen|os, |ndusr|os, mer|o ccnd||cns end gonore| occncm|c onv|rcnmon.
|nvos|ng |n sme||or ccmpen|os |nvc|vos groeor r|s|s nc esscc|eod v|| |nvos|ng |n mcro ose|||s|od ccmpen|os, suc| es |us|noss r|s|, s|gn|ncen scc| pr|co
ucue|cns end ||||qu|d|,.
Scc|s c mod|ums|zod ccmpen|os one|| spoc|e| r|s|s, suc| es ||m|od prcduc ||nos, mer|os, end nnenc|e| roscurcos, end groeor mer|o vc|e|||, |en socur||os
c |ergor, mcroose|||s|od ccmpen|os.
Ve|uo |nvos|ng dcos nc guerenoo e prcn cr o||m|neo r|s|. Nc e|| ccmpen|os v|cso scc|s ero ccns|dorod c |o ve|uo scc|s ero e||o c urn |o|r |us|noss
ercund cr succossu||, omp|c, ccrroc|vo sreog|os v||c| vcu|d rosu| |n scc| pr|cos |e dc nc r|so es |n||e||, oxpocod.
Crcv| |nvos|ng dcos nc guerenoo e prcn cr o||m|neo r|s|. |o scc|s c |oso ccmpen|os cen |evo ro|e|vo|, ||g| ve|ue|cns. |oceuso c |oso ||g|
ve|ue|cns, en |nvosmon |n e grcv| scc| cen |o mcro r|s|, |en en |nvosmon |n e ccmpen, v|| mcro mcdos grcv| oxpoce|cns.
Asso e||cce|cn end d|vors|nce|cn dc nc essuro e prcn cr prcoc ege|ns |css |n doc||n|ng nnenc|e| mer|os.
|o |nd|cos ero unmenegod. An |nvoscr cennc |nvos d|roc|, |n en |ndox. |o, ero s|cvn cr |||usre|vo purpcsos cn|, end dc nc roproson |o
porcrmenco c en, spoc|nc |nvosmon.
The indices selected by Morgan Stanley Smith Barney to measure performance are representative of broad asset classes. Morgan Stanley Smith Barney retains
the right to change representative indices at any time.
|||s |nvos|ng r|s|s ero s|m||er c |cso esscc|eod v|| d|roc |nvosmons |n roe| oseo. prcpor, ve|uo ucue|cns, |ec| c ||qu|d|,, ||m|od d|vors|nce|cn end
sensitivity to economic factors such as interest rate changes and market recessions.
|oceuso c |o|r nerrcv ccus, soccr |nvosmons ond c |o mcro vc|e||o |en |nvosmons |e d|vors|, ecrcss men, soccrs end ccmpen|os.
Core|n socur||os roorrod c |n ||s meor|e| me, nc |evo |oon rog|sorod undor |o U.S. Socur||os Ac c 9::, es emondod, end, | nc, me, nc |o corod
cr sc|d e|son en oxomp|cn |ororcm. |oc|p|ons ero roqu|rod c ccmp|, v|| en, |oge| cr ccnrecue| rosr|c|cns cn |o|r purc|eso, |c|d|ng, se|o, oxorc|so c
rights or performance of obligations under any securities/instruments transaction.
|nvos|ng |n cro|gn omorg|ng mer|os one||s groeor r|s|s |en |cso ncrme||, esscc|eod v|| dcmos|c mer|os, suc| es pc|||ce|, curronc,, occncm|c end mer|o r|s|s.
Credit ratings are subject to change.
||s meor|e| |s d|ssom|neod |n Ausre||e c roe|| c||ons v|||n |o moen|ng c |o Ausre||en Ccrpcre|cns Ac |, |crgen Sen|o, Sm|| |erno, Ausre||e |,
|d ,A.|.N. 9 009 ~b bbb, |c|dor c Ausre||en nnenc|e| sorv|cos ||conso Nc. 2~08:),
|crgen Sen|o, |r|veo Woe|| |enegomon |d, v||c| |s eu|cr|zod end rogu|eod |, |o ||nenc|e| Sorv|cos Au|cr|,, epprcvos cr |o purpcso c soc|cn 2
c |o ||nenc|e| Sorv|cos end |er|os Ac 2000, ccnon cr d|sr||u|cn |n |o Un|od ||ngdcm,
||s meor|e| |s d|ssom|neod |n |o Un|od Seos c Amor|ce |, |crgen Sen|o, Sm|| |erno, ||C.
||rdper, dee prcv|dors me|o nc verren|os cr roprosone|cns c en, ||nd ro|e|ng c |o eccurec,, ccmp|oonoss, cr |mo||noss c |o dee |o, prcv|do end
shall not have liability for any damages of any kind relating to such data.
|crgen Sen|o, Sm|| |erno, meor|e|, cr en, pcr|cn |oroc, me, nc |o ropr|nod, sc|d cr rod|sr||uod v||cu |o vr|on ccnson c |crgen Sen|o, Sm|| |erno,.
7 vonctn sftntrv svifn etnnrv l ,tnutnv zc+
20: |crgen Sen|o, Sm|| |erno, ||C. |om|or S||C. CW|~~~9 ~~~9 |SS| 0/: