Announcing Important Fund Changes to the BorgWarner Retirement Savings Plans
This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.
Important notice regarding your rights under the:
BorgWarner Retirement Savings Plan*
BorgWarner Morse Tec Ithaca Plant Retirement Savings Plan
These plans are collectively referred to as “the Borg Warner Retirement Savings Plans” or “the plan” in this booklet.
*Includes the BorgWarner DTP Muncie Plant Local 287 Retirement Investment Plan and the BorgWarner DTP Muncie
Plant Retirement Savings Plan.
to the BorgWarner Retirement
As a participant in one of the BorgWarner Retirement Savings Plans, you know that BorgWarner is dedicated
to helping you plan financially for retirement. With company contributions, tax advantages and a choice of
investments, your retirement plan is a great benefit, and we’re always looking for ways to make it better.
In keeping with this commitment, we are pleased to announce a change to the plans’ investment lineup.
Northern Trust funds will replace the BlackRock funds effective February 1, 2011.
While no action is required on your part, you should read the contents of this booklet so that you understand how the
changes may affect you and your options.
These changes will result in a brief blackout period from Monday, January 24, 2011, to Tuesday, February 1, 2011,
when you will not be able to make any changes to your account. Details can be found on page 7 of this brochure.
Summary of Changes Advantages of the Change to Northern Trust Funds
If you currently have money invested in or contributions directed to any of the BorgWarner’s Employee Benefits Committee has determined that it is advanta-
BlackRock funds, it will automatically be moved to a comparable Northern Trust geous to make these changes for the following reasons:
Fund as shown below.
This current BlackRock Will be replaced by this thantheircomparableBlackRockFunds
investment Northern Trust investment This decrease in fees means that more of your dollars are invested and build-
LifePath Retirement Fund, J > Focus 2010 Fund ing toward your retirement.
LifePath 2015 Fund, J > Focus 2015 Fund
BlackRock investment Current investment management fee
LifePath 2020 Fund, J > Focus 2020 Fund
LifePath Funds 0.15%
LifePath 2025 Fund, J > Focus 2025 Fund
US Debt Index Fund 0.06%
LifePath 2030 Fund, J > Focus 2030 Fund
Equity Index Fund 0.03%
LifePath 2035 Fund, J > Focus 2035 Fund
LifePath 2040 Fund, J > Focus 2040 Fund Northern Trust investment Current investment management fee
LifePath 2045 Fund, J > Focus 2045 Fund Focus Funds 0.10%
LifePath 2050 Fund, J > Focus 2050 Fund Collective Aggregate Bond Index Fund 0.04%
LifePath 2055 Fund, J > Focus 2055 Fund Collective S&P 500 Index Fund 0.02%
US Debt Index Fund, T > Collective Aggregate Bond Index Fund • orthernTrustFocusFundsmanageyourretirementassetsbeyondthe
Equity Index Fund, T > Collective S&P 500 Index Fund averageageofretirement
This continued transition of the funds’ asset allocation to more conservative
The BlackRock LifePath Retirement Fund investment will be replaced by the investments is aligned with BorgWarner’s philosophy of encouraging partici-
Northern Trust Focus 2010 Fund because its asset allocation most closely matches pants to remain invested at the point of retirement and beyond.
that of the BlackRock LifePath Retirement Fund investment.
If you do not want your BlackRock Fund automatically moved, you must change out exposuretohighyieldbondsandcommodities
of the BlackRock Fund(s) prior to the blackout period. A diversified portfolio, which includes these investment classes, can help
BorgWarner will also add the Northern Trust Income Fund (part of the suite of reduce the overall volatility of your retirement account.
Northern Trust Focus Funds) as an investment alternative. The Northern Trust See the appendix on page 11 for a comparison of the differences in asset alloca-
Income Fund is designed with a conservative asset allocation appropriate for tion between the BlackRock and Northern Trust Funds.
people already in retirement with a focus on stability and liquidity. Although none
of the BlackRock Funds are transferring directly into this fund, it will be available to You do not need to take any action regarding the investment changes unless you
plan participants beginning February 1. For a side-by-side comparison of the asset wish to make a change in your account prior to the start of the blackout period.
allocation of your current BlackRock LifePath Funds and the Northern Trust Focus The blackout period is a short period of time during which account activity in
Funds, please refer to the Appendix found on page 11 of this booklet. the BlackRock Funds will be suspended while the assets are being moved to the
comparable Northern Trust Funds. Please refer to page 7 of this booklet for more
information regarding the blackout period.
About target-date funds
Target-date funds, also known as target maturity or life-cycle funds, are
broadly diversified portfolios designed to simplify the way you invest for
retirement. These funds are designed to provide exposure to a variety of
asset classes with an associated portfolio allocation for your investment
time horizon. The funds become more conservative over time as retirement
nears, and you approach your target retirement year.
The new Focus Funds invest in a broadly diversified portfolio of primarily index
(passive) investment funds, composed of U.S. and international stocks,
U.S. bonds, and U.S. government cash reserves. Also included are real estate,
commodities, and Treasury Inflation Protected (TIP) securities, which act as a
hedge against inflation. Each fund is designed for investors expecting to retire
or start receiving retirement income within a few years of the target-date year
noted in the fund’s name. Once you reach age 75, you will automatically be
invested in the Focus Income Fund.
The Benefit of Target Retirement Date Funds
Generally, the greater number of years you have until retirement, the greater amount
Introducing the Northern Trust Funds of risk you can assume
Collective S&P 500 Index Fund • Want to focus on building your
The Northern Trust Collective S&P 500 Index Fund is designed to approximate the In early investing years you may allocate investment portfolio
your portfolio more aggressively because
risk and return characteristics of the S&P 500 Index. It uses the S&P 500 Index as • Have more time to recover from
its benchmark, which is also used by the fund it is replacing—the BlackRock Equity investment losses
Index Fund. • Want to focus on preserving your
In later investment years you may allocate investment portfolio
Collective Aggregate Bond Index Fund your portfolio more conservatively because
• Have less time to recover from
The Northern Trust Collective Aggregate Bond Index Fund is designed to approximate the you—
risk and return characteristics of the Barclays Capital U.S. Aggregate Index. It uses this
index as its benchmark, which is also used by the fund it is replacing—the BlackRock Moving from building to preserving as you • Rebalancing means shifting your asset
approach your investment time horizon, allocation over time among different
US Debt Index Fund.
requires rebalancing your portfolio asset classes
The Northern Trust Focus Funds are target-date funds that seek to meet the objective
of an all-in-one investment option, designed to provide for wealth accumulation and
capital preservation, consistent with an asset allocation that is managed according to
the fund’s target-date year.
Understanding the Asset Allocation Glide Path
The asset allocation glide path,* as illustrated below, determines the change in a Focus Fund’s asset allocation over time. The glide path begins with a more aggressive
allocation and gradually moves to a more conservative allocation. In early investing years, the glide path allocates more to asset classes like stocks to maximize wealth
accumulation potential. In later investing years, the glide path allocates more to fixed income and cash securities to add stability and generate income within the fund.
The investment risks of each Focus Fund change over time as its asset allocation changes. These funds are subject to the volatility of the financial markets including
equity and fixed income investments in the U.S. and abroad and subject to risks associated with investing in these and other classes.**
How Asset Allocation Changes Over Time:
The glide path determines the change in asset allocation over time, from a more aggressive allocation to a more conservative allocation.
In early investing years, allocations to stocks and inﬂation hedge securities In later investing years, allocations to bonds and cash securities increase to add stability
total 86% to maximize wealth accumulation and generate income. For example, 10 years from retirement age 65, allocations to bonds
and cash total approximately 34%††
80 Inﬂation Hedge†
Maximize Wealth Add
60 Accumulation Stability
25 30 35 40 45 50 55 60 65 70 75 80
* Glide path is the term used to describe the speed at which the asset allocation of a target-date strategy changes over time. Based upon an airplane analogy, where the glide path is used to land the plane, in a
target-date strategy the glide path is used to change the combination of assets to become more conservative as the target year approaches.
**Principal invested is not guaranteed at any time, including at or after their target dates. Unit price and investment return will vary.
These securities include real estate, commodities, and Treasury Inflation Protected (TIP) securities.
Subject to change.
Current targeted asset allocations: When changes will happen
This chart shows the change in both strategy and asset allocation according to age,* balancing your T. Rowe Price will transfer your BlackRock investment(s)
risk tolerance with the number of years you have until retirement. and future contributions into the comparable Northern
Trust Fund by February 1, 2011. To facilitate the
Age <20 25 30 35 40 45 50 55 60 65 >70 transfer, it will be necessary to suspend account activity
Years to Retire >45 >40 35 30 25 20 15 10 5 – – in the BlackRock Funds for a short period of time. This
Focus Fund 2055 2050 2045 2040 2035 2030 2025 2020 2015 2010 Income is referred to as a blackout period.
Stocks (Equities) 77% 77% 77% 77% 77% 69% 61% 54% 46% 39% 23%
Inflation Hedge** 9% 9% 9% 9% 9% 10% 11% 12% 13% 14% 16% BLACKOUT PERIOD
Bonds (Fixed Income) 14% 14% 14% 14% 14% 20% 26% 31% 38% 43% 55% January 24, 2011, to February 1, 2011
Cash 0% 0% 0% 0% 0% 1% 2% 3% 3% 4% 6%
Between 4 p.m. eastern time on Monday, January 24,
MAXIMIZING WEALTH ADDING STABILITY
2011, and the opening of the stock market at
9:30 a.m. eastern time on Tuesday, February 1, 2011,
What you can expect you will not be able make any changes or transactions
The changes will affect you if your plan account is currently invested in a BlackRock Fund or if your in your account that involve a LifePath Retirement Fund,
investment election directs future contributions to a BlackRock Fund. the BlackRock U.S. Debt Index Fund, or the BlackRock
Please be aware that if you did not previously make an investment election for your account(s), your
Equity Index Fund. This includes exchanges, investment
account(s) may be currently invested in a BlackRock LifePath Fund. The LifePath Funds have been elections, loans, distributions, and rebalancing.
the default investment for participants who have not made an investment election for their accounts. During the blackout period, you will be able to make
After February 1, 2011, the Focus funds will be the default investment election. changes or transactions in your account that involve any
If you have a balance in any of the BlackRock Funds, no action is required on your part. Your existing other investment option available to you through your
account balance(s) will automatically be transferred into the investment option with the same target date or plan. The restrictions apply only to BlackRock Funds.
objective as that of your current investment on February 1, 2011. The transaction(s) will be made for you It is very important that you review and consider the
and will appear in your account history. appropriateness of your current investments in light of
Effective February 1, 2011, if you are directing future contributions to any of the BlackRock funds, your inability to direct or diversify those investments
your allocation will be redirected automatically to the comparable Northern Trust fund. during the blackout period.
You have the right to direct or change how your plan account is invested. If you would like to move a You will have full access to your total account
portion or all of your balance in a BlackRock fund before these changes occur, you may do so before balance after 9:30 a.m. eastern time on Tuesday,
the start of the blackout period at 4 p.m. eastern time on Monday, January 24, 2011, or after it ends at February 1, 2011.
9:30 a.m. eastern time on Tuesday, February 1, 2011.
If you have questions regarding the blackout period,
you may call the T. Rowe Price Plan Account Line at
* Subject to change 1-800-922-9945. Representatives are available on
**These securities include real estate, commodities, and Treasury Inflation Protected (TIP) securities.
business days between 7 a.m. and 10 p.m. eastern time.
Take another look at your investment choices
With new investment options available, it’s a good time to review your retirement investing strategy.
Your retirement needs, expenses, sources of income, and available assets are some important factors
for you to consider in addition to your chosen investments.
For more information on BorgWarner’s new fund lineup, shown on the next page, call 1-800-922-9945,
to request a prospectus or fund fact sheet, which includes investment objectives, risks, fees, expenses,
and other information that you should read and consider carefully before investing.
Fund fact sheets are also available online at rps.troweprice.com. Log in to your account and click on
the mailbox icon to go to the Communications Center. Then open the envelope labeled Northern Trust
Fund fact sheets or see Human Resources for a copy.
The Plan’s Investment Options Effective February 1, 2011
The Northern Trust Focus Funds will replace the BlackRock LifePath Funds, which
had an investment fee of 0.15%.
Each fund’s annualized expense ratio is based on fiscal year-end data available
as of 10/31/2010. The fund expense ratio is composed of both operating costs
and management fees or the equivalent of such costs and fees, depending on the
Target Retirement Date1 Lipper Fund Category Ratio2 Average3 investment option. The fund expense ratio for all Northern Trust Collective Funds,
Northern Trust Income Fund Mixed-Asset Target Alloc. Consv. Funds 0.10% 1.61% including the Northern Trust Focus Funds, reflects annual investment management
expenses only. They do not include additional expenses that may be paid to cover
Northern Trust Focus 2010 Fund Mixed-Asset Target 2010 Funds 0.10% 0.72% operational costs of the fund. These expenses may vary, are subject to change and
Northern Trust Focus 2015 Fund Mixed-Asset Target 2015 Funds 0.10% 0.82% are reflected in the calculation of the daily net asset value (NAV) of the fund.
Northern Trust Focus 2020 Fund Mixed-Asset Target 2020 Funds 0.10% 0.86%
The Lipper No-Load Expense Ratio Average is provided to compare the ongoing costs
of investing in each listed fund with other funds in the identified Lipper category. The
Northern Trust Focus 2025 Fund Mixed-Asset Target 2025 Funds 0.10% 0.85% plan will offer trust classes of the Northern Trust funds. Lipper does not track trusts,
therefore the No-Load Expense Ratio Average for the corresponding mutual fund has
Northern Trust Focus 2030 Fund Mixed-Asset Target 2030 Funds 0.10% 0.93%
been used for illustrative purposes.
Northern Trust Focus 2035 Fund Mixed-Asset Target 2035 Funds 0.10% 0.89% 4
The T. Rowe Price Stable Value Common Trust Fund (the “Trust”) is not a mutual
Northern Trust Focus 2040 Fund Mixed-Asset Target 2040 Funds 0.10% 0.96% fund. It is a common trust fund established by T. Rowe Price Trust Company under
Maryland banking law, and its units are exempt from registration under the Securi-
Northern Trust Focus 2045 Fund Mixed-Asset Target 2045 Funds 0.10% 0.90% ties Act of 1933. Investments in the Trust are not deposits or obligations of, or guar-
Northern Trust Focus 2050 Fund Mixed-Asset Target 2050 Funds 0.10% 0.92% anteed by, the U.S. government or its agencies or T. Rowe Price Trust Company.
Although the Trust seeks to preserve the value of your investment at $1.00 per unit,
Northern Trust Focus 2055 Fund Mixed-Asset Target 2055 Funds 0.10% 0.92% it is possible to lose money by investing in the Trust.
Stable Value 5
The Northern Trust Collective Aggregate Bond Index Fund will replace the
BlackRock Debt Index Fund, which had an investment fee of 0.06% as of
T. Rowe Price Stable Value Fund 4
Money Market Funds 0.20% 0.61%
The Northern Trust Collective S&P 500 Index Fund will replace the BlackRock Equity
Northern Trust Collective Aggregate Intermediate Investment Grade 0.04% 0.68% Index Fund, which had an investment fee of 0.03% as of 9/30/2010.
Bond Index Fund5 Debt Funds
The Buffalo Small Cap Fund normally invests at least 80% of its net assets in domestic
common stocks and other equity securities (including convertible preferred stocks and
Stocks warrants) of small-cap companies. The fund considers a company to be a small-cap
Northern Trust Collective S&P 500 Index Objective Funds 0.02% 0.34% company if, at time of purchase, (1) it has a market capitalization of $1 billion or
less, or (2) the company’s market capitalization would place it in the lowest 20% total
S&P 500 Index Fund6 market capitalization of companies that have equity securities listed on a U.S. national
Buffalo Small Cap Fund7 Small-Cap Core Funds Average 1.03% 1.71% securities exchange or trading on the Nasdaq system. Based on current market condi-
tions, the fund targets companies with individual market capitalizations of $2 billion
Harbor International Fund 8
International Large-Cap Core Funds Average 0.85% 1.00% or less at the time of initial purchase. In its selection process for this fund, the advisor
Vanguard Mid-Cap Index Fund, Mid-Cap Core Funds Average 0.08% 1.15% seeks to identify a broad mix of small-cap companies that are expected to benefit from
long-term industry, technological, or other trends. The advisor also selects securities
Institutional based on (1) fundamental analysis of industries and the economic cycle; (2) company-
Company Stock specific analysis, such as product cycles and quality of management; and (3) rigorous
BorgWarner Company Stock Company Stock N/A N/A 8
Investing in international and emerging markets poses special risks, including
For more information on BorgWarner’s new fund lineup, call 1-800-922-9945, to request a potentially greater price volatility due to social, political, and economic factors, as well
as currency exchange rate fluctuations. These risks are more severe for securities of
prospectus or fund fact sheet, which includes investment objectives, risks, fees, expenses, and issuers in emerging market regions. The fund has a redemption fee of 2% against
other information that you should read and consider carefully before investing. shares that are held for less than 60 days. The fund’s advisor has voluntarily agreed
to limit the fund’s operating expenses. Such agreement may be discontinued at any
time without notice.
A Guide to Understanding Plan Fees FEES FOR MUTUAL FUNDS—These fees are deducted from each fund’s assets and
The plan provides a great way to save for your retirement. It lets you defer fall into the following categories:
part of your salary before taxes and invest the money in a variety of invest- • Investment management fees—These fees are paid to the fund’s investment manager
ment options. Of course, there are costs associated with participating in the for overseeing the portfolio. Generally, an index fund, which seeks to match the
plan for services like plan administration and investment management. performance of a particular index, will have lower investment management fees
Please note that you should not base your investment decisions on fee infor- than an actively managed fund in the same asset class.
mation alone. There are many features of an investment option that may make • Administrative fees (non-T. Rowe Price funds)—Non-T. Rowe Price funds generally have fees
it an appropriate investment choice for you—fees are only one component. for administrative services associated with T. Rowe Price’s processing of transactions
While cost is one factor, your decision should be based upon the options that involving the funds and maintaining account records. Such fees do not constitute pay-
are suitable for your risk profile and have the potential to help you reach your ment in any manner for investment advisory services or for distribution of those funds.
• Other fees—These cover administrative costs such as maintaining shareholder
ADMINISTRATIVE FEES—In general, administrative fees cover the cost of records and furnishing shareholder statements and financial reports. All fees
operating the plan. Administration includes recordkeeping, accounting, associated with a mutual fund are disclosed in its prospectus, which you can
trustee services, auditing services, legal services, account statements, edu- obtain at rps.troweprice.com or by calling 1-800-922-9945.
cational materials, websites, and customer service representatives. The plan
assesses an administrative fee equal to 0.04% per year of your total account REDEMPTION FEES—These fees are charged to an investor who sells shares of
balance. One-fourth of this fee (0.01%) is deducted from your quarter-end a mutual fund on or before a designated holding period specified by the fund.
account balance on the first day of the following quarter. Additionally, there Redemption fees are designed to lessen the effect of short-term trading and protect
is a $60 per year fee ($15 deducted each quarter). the fund and its long-term investors. They are paid to the fund to help offset the
transaction costs that may be generated by frequent trading. Redemption fees are
LOAN FEES—There is a one-time initiation fee of $50 for each loan you take always described in the mutual fund’s prospectus. As of November 2010, one fund
from your retirement plan account. in the plan’s lineup has a redemption fee. Harbor International Fund assesses a
QDRO FEES—There is a one-time fee of $250 for the initial inquiry relating redemption fee of 2% on assets held for 59 days or less.
to a domestic relations order and an additional $500 fee to review the order
for qualification. These fees are deducted from your account balance and Excessive trading
are paid to Aon Consulting. Excessive or short-term trading occurs when a participant places frequent trades into
and out of an investment, often holding shares for a very short period of time. This
FEES FOR COLLECTIVE INVESTMENT FUNDS—These are collective trust
practice can drive up the investment’s administrative costs and negatively impact the
funds managed by banks or trust companies that pool investments of retire-
fund manager’s strategy. As a result, many funds responded with additional monitoring
ment plans and other similar investors. The BlackRock funds currently offered
and have implemented short-term trading fees. A potential consequence of excessive
through the plan, as well as the Northern Trust funds that will replace the
trading for you may be the suspension of your trading privileges and redemption fees
BlackRock funds in the plan on February 1, 2011, are collective trust funds.
for excessive trading under the Harbor International Fund.
Each investor has a proportionate interest in the collective trust fund assets.
Like mutual funds, collective investment funds may have a variety of investment
objectives. There are no front- or back-end fees associated with a collective
investment fund, but there are investment management and administrative fees.
APPENDIX / PG 11
Asset Allocation Comparison of BlackRock vs. Northern Trust Focus Funds
BlackRock Life Path Funds
2055 2050 2045 2040 2035 2030 2025 2020 2015 Retirement Fund
9% 9% 8% 9% 9% 9% 9% 10% 10% 10%
28% 35% 47%
90% 90% 75% 69% 63% 53%
Northern Trust Focus Funds
9% 9% 9% 9% 9% 10% 11% 3% 12% 3% 13% 4% 14% 16%
14% 14% 14% 14% 14% 6% 23%
20% 46% 39%
77% 77% 77% 77% 77% 69% 38% 43% 55%
2055 2050 2045 2040 2035 2030 2025 2020 2015 2010 Income Fund
Equities Fixed Income Cash Other*
Fund fact sheets are also available online at rps.troweprice.com. Log in to your account and click on the mailbox icon to go to the Communications
Center. Then open the envelope labeled Northern Trust Fund fact sheets or see Human Resources for a copy.
*The BlackRock Funds include real estate and Treasury Inflation Protected (TIP) securities. Northern Trust funds include real estate, commodities, and Treasury Inflation
Protected (TIP) securities.
Accessing your account
To change your contribution percentage, make an exchange of current assets, or reallocate your future contributions to different investments (a “mix change”), you can access
your account online or by phone 24/7. Remember that you will not be able to initiate any transactions involving a BlackRock fund while your assets are being transferred from
BlackRock to Northern Trust.
ONLINE—Log in to rps.troweprice.com. If it’s your first visit, click Register, and then follow the instructions to establish a user name and password for future use.
PHONE—Call 1-800-922-9945. Press or say your Social Security number and personal identification number (PIN) to access your account. You can speak your requests or
use your touch-tone keypad. For personal assistance, representatives are available on business days between 7 a.m. and 10 p.m. eastern time.