October 7, Dear Colleagues,

Transcription

1 Benefits, Human Resources October 7, 2010 Dear Colleagues, I am writing to let you know about an important change to the Getty s Benefits plan that will occur at the end of this year. Beginning next year, the J. Paul Getty Employee Investment Program, which includes the Employee Investment Plan (EIP) and the Defined Contribution Retirement Plan (DCRP), will be administered by Vanguard, a client-owned investment management company. The program is currently administered by Fidelity. This change came about as a result of a review conducted by The Retirement Plans Committee as part of its fiduciary duties in overseeing the choice of an administrator for the Investment Program. The Retirement Plans Committee is appointed by the Board of Trustees to supervise the general administration of the Plans and to assume responsibility for carrying out their provisions. The current Committee members are all members of Getty senior staff including: Patricia Woodworth,VP, Chief Financial Officer, & Chief Operations Officer (Chair); Stephen Clark, VP, General Counsel & Secretary; Marianne Rusk, Director, Human Resources; Tim Whalen, Director, Getty Conservation Institute; and Jim Williams, VP & Chief Investment Officer. One of the Committee s fiduciary duties is to review periodically the plan administrator to be sure that the investment choices being offered to Getty employees are providing reasonable returns, that fees are fair and reasonable and that the services received are competitive. The Retirement Plans Committee reviewed the investment choices and evaluated the services and fees offered by a number of investment management companies, including Fidelity. After extensive review and careful consideration, the Committee unanimously chose to move to Vanguard, primarily because the fees deducted from employee accounts, on average, are below the fees Fidelity has been deducting. In addition, its returns were competitive with Fidelity and its website and educational programs were judged to be superior to Fidelity including bilingual services. Fees deducted from accounts are one of the most important elements in determining longterm investment performance and achieving retirement objectives. The Getty Trust, as the employer, will pay a slightly higher fee to Vanguard for administering the plan than was paid to Fidelity.

2 In the coming weeks, you ll receive more detailed information via mail and about how the transition will take place, and key dates of which you need to be aware. Vanguard representatives will attend the Getty s annual Benefits Fair to answer your questions, and you ll have opportunities in the coming months to attend on-site meetings. You can visit at any time to preview the on-line financial and investing tools or to just learn more about investing with Vanguard. As I know you will have questions about this change, attached are answers to frequently asked questions. And, as always, you can submit any questions you have to Benefits@getty.edu or ext Questions and answers will be posted regularly on GO as well as on campus bulletin boards. Marianne C. Rusk Director, Human Resources Vanguard Announcement Page 2 October 7, 2010

3 Benefits, Human Resources Employee Investment Program Conversion to Vanguard Q & A s 1. Who is Vanguard? Founded in 1975, Vanguard is one of the world s largest providers of investment products and services to individual investors, institutions, and financial professionals. Vanguard is client-owned and historically has had a strong commitment to keeping management fees low. 2. Will my account be charged with increased or additional fees? No. Although fee structures vary and are specific to the fund, Vanguard funds on average have lower fund fees than Fidelity. Vanguard is known as an industry leader with low fee funds. Information about fund fees is available in each fund prospectus. 3. Will I continue to receive the EIP Match? Yes. Your contribution will continue to be matched by the Getty dollar for dollar up to 4% of your base pay each pay period. 4. When will the transition take place? The assets will transfer from Fidelity to Vanguard at the end of December There will be a few days before and after the transfer during which participants will be unable to access their accounts. 5. How will it be determined to which Vanguard funds my Fidelity assets will be transferred? You will be provided with a chart that will show how the current funds invested with Fidelity will be transferred to comparable funds with Vanguard. This is known as mapping, and it will help ensure that your investment strategy is maintained. In addition, you will be given instructions that tell you how to change your investment strategy and move your money into an alternate fund offered by Vanguard if you so choose. The following list is the funds that will be available through Vanguard. Page 1 October 2010

4 Fund Buffalo Small Cap Fund Calvert Social Investment Fund Equity Portfolio A Fidelity Blue Chip Growth Fund Retail Fidelity Contrafund Fidelity Low-Priced Stock Fund Retail Perkins Small Cap Value Fund T Vanguard 500 Index Fund Investor Vanguard Growth Index Fund Investor Fund Vanguard Mid-Cap Index Fund Investor Vanguard Prime Money Market Fund Investor Vanguard REIT Index Fund Investor Vanguard Small-Cap Growth Index Investor Vanguard Small-Cap Index Fund Investor Vanguard Small-Cap Value Index Investor Vanguard Target Retirement 2005 Investor Vanguard Target Retirement 2010 Investor Vanguard Target Retirement 2015 Investor Vanguard Target Retirement 2020 Investor Vanguard Target Retirement 2025 Investor Vanguard Target Retirement 2030 Investor Vanguard Target Retirement 2035 Investor Vanguard Target Retirement 2040 Investor Vanguard Target Retirement 2045 Investor Vanguard Target Retirement 2050 Investor Vanguard Target Retirement Income Investor Vanguard Total Bond Market Index Investor Vanguard Total International Stock Index Investor Vanguard Value Index Fund Investor Vanguard Windsor II Fund Investor Ticker / Symbol BUFSX CSIEX FBGRX FCNTX FLPSX JSCVX VFINX VIGRX Ticker / Symbol VIMSX VMMXX VGSIX VISGX NAESX VISVX VTOVX VTENX VTXVX VTWNX VTTVX VTHRX VTTHX VFORX VTIVX VFIFX VTINX VBMFX VGTSX VIVAX VWNFX 6. Will Vanguard provide on-site representatives? Yes. During the transition period there will be Vanguard representatives at the benefits fair. Also in January, Vanguard representatives will conduct informational meetings for employees. We are confident that Getty employees will be well serviced by Vanguard, with quality education, online capabilities, fund offerings and low overall costs to participants. Page 2 October 2010

5 In addition, Vanguard has an education department that provides the following ongoing support: 1. A robust website that features retirement planning and education 2. A toll-free telephone line with live assistance 3. A voice activated system for account balances, transfers 4. Statements that provide education in addition to account information 7. Can I contribute to any non-vanguard funds? Several non-vanguard funds will be available. Currently, many Getty participants invest in Fidelity s Blue Chip Growth Fund and Contrafund. Both funds will continue to be available to accept new contributions. Participants in Fidelity s Low-Priced Stock Fund will be able to remain invested in that fund, but the fund will not be open to new contributions. Several other non-vanguard funds will also be available. These include: Calvert Social Investment Fund Equity Portfolio A Perkins Small Cap Value Fund T Buffalo Small Cap Fund 8. Why are only these two Fidelity funds still available for contributions? These are the funds in which the highest numbers of Getty participants have made investments. Retaining these two funds reduces the impact of the change to Vanguard for many participants because the balances in these accounts will remain invested with Fidelity. Of course, participants have the option of moving their investments in these accounts to a Vanguard fund if they choose to do so. We expect, over time, many participants will make this switch. 9. Why can t I continue to invest in Fidelity s Low Priced Stock Fund? Essentially, Fidelity's redemption fee policy/philosophy differs so much from Vanguard's that it makes for an operational challenge in accommodating the Fidelity redemption fee funds on Vanguard s Institutional platform. Fidelity imposes a redemption fee on a variety of transactions, such as withdrawals and terminations, whereas Vanguard applies a redemption fee only to participant-initiated exchange transactions. Vanguard s record-keeping system cannot accommodate the assessment of the redemption on the number of transactions to which Fidelity believes the fee applies. If you are invested in Fidelity s Low Priced Stock Fund and choose to keep your investments in this account, your transactions will be restricted to redemptions. Page 3 October 2010

6 10. Why is Vanguard offering so many fewer funds? Since the inception of defined contribution plans, the philosophy of fund choices has changed. Initially, the thinking was that offering a larger number of funds would encourage people to participate. More recently, research shows that having too many funds from which to choose discourages participation. Both Fidelity and Vanguard recommended a reduced number of funds in their proposals this year. 11. What do I need to do now? No action is required at this time. Between now and December, we will provide ongoing information in employee communications including letters, newsletters, postcards, onsite meetings and a website. In late December 2010, your current contribution amount and investment elections will transfer to Vanguard. Until then, you may change your contribution and/or investments by going through Fidelity, at or The exact date of when the transfer will occur and the dates that you will not have access to your account will be announced in mid-november. Page 4 October 2010