RE: Changes to the Engility Master Savings Plan (the 401(k) Plan) Investment Lineup

Transcription

1 November 30, 2016 RE: Changes to the Engility Master Savings Plan (the 401(k) Plan) Investment Lineup Dear Participant: Engility is focused on providing you with the best opportunity to help you prepare for retirement through our 401(k) Plan the Engility Master Savings Plan. This includes regularly reviewing and revising the investment choices offered in the 401(k) Plan. After a recent review, Engility has decided to make the changes outlined in this document. Please review the information provided to learn more about the upcoming changes to the 401(k) Plan that are scheduled to take place after the market closes on December 30, What will take place? On December 30, 2016, after the stock market closes (generally 4:00 p.m. Eastern time), the Prudential Guaranteed Income Fund will be added to the 401(k) Plan investment offering. Also on that date, the Managed Income Portfolio II Class 2 will be frozen to new contributions. Additionally, the Wells Fargo Stable Return Portfolio U and the Fidelity Money Market Trust Retirement Government Money Market Portfolio will be removed from the 401(k) Plan investment offering. Please refer to the section entitled How will the fund change affect me? for more information. In addition to the investment option changes that will take place on December 30 th, the vesting schedule for the 401(k) Plan will change from a 3-year cliff vesting schedule to a 3-year stepped vesting schedule (25%, 50%, 100%). Engility will match 50% of employee eligible compensation up to 8% of pay that you defer to the 401(k) Plan. The frequency for the Employer Match will also change from a one-time annual match at the end of the year, to a quarterly match as long as you are in an active status on the last day of the quarter. Before 4:00 p.m. Eastern time The Managed Income Portfolio II Class 2, Fidelity Money Market Trust Retirement Government Money Market Portfolio and the Wells Fargo Stable Value Return Portfolio U are investment options in the 401(k) Plan. After 4:00 p.m. Eastern time The Prudential Guaranteed Income Fund has been added as an investment option to the 401(k) Plan. The Managed Income Portfolio II Class 2 is now frozen to new contributions and exchanges into the fund. Fidelity Money Market Trust Retirement Government Money Market Portfolio has been removed as an investment option The Wells Fargo Stable Return Portfolio U has been removed as an investment option. The Employer Matching Contribution is a onetime annual match at the end of the year for employees with an active, full time status on the last business day of the year. The Employer Matching Contribution is now a quarterly match funded as soon as administratively feasible following the end of the quarter following the end of the quarter for employees with an active, full time status on the last business day of the quarter. Page 1 of 6

2 Before 4:00 p.m. Eastern time The vesting schedule for the Employer Matching Contributions is a 3-year cliff schedule Year(s) of Service Vested Percentage 0-1 year 0% 1-2 years 0% 2-3 years 0% 3+ years 100% After 4:00 p.m. Eastern time The vesting schedule for the Employer Matching Contributions is now a 3-year stepped schedule: Year(s) of Service Vested Percentage 0-1 year 0% 1-2 years 25% 2-3 years 50% 3+ years 100% How will the fund change affect me? The changes that are scheduled to take place may or may not affect you depending on your current investment selections. Either way, you are not required to take any specific action because the changes will result in your account balance(s) and future contributions being transferred to new funds. If.. If you are currently contributing to the Managed Income Portfolio II Class 2 fund.. Then.. then your balance in the Managed Income Portfolio Class 2 fund will remain invested in the fund. Your future contributions will be redirected to the Prudential Guaranteed Income Fund. If you are currently contributing to the Fidelity Money Market Trust Retirement Government Money Market Portfolio.. then your balance in the Fidelity Money Market Trust Retirement Government Money Market Portfolio and your future contributions will be redirected to the Prudential Guaranteed Income Fund. If you are currently have a balance in the Wells Fargo Stable Value Return Portfolio U.. then your balance in the Wells Fargo Stable Value Return Portfolio U will be moved to the Prudential Guaranteed Income Fund. If you don t have a balance in the Managed Income Portfolio II Class 2, Fidelity Money Market Trust Retirement Government Money Market Portfolio or the Wells Fargo Stable Value Return Portfolio U, but would like to contribute to the new investment option...then you can select the Prudential Guaranteed Income Fund as an investment option for your account beginning January 3, Page 2 of 6

3 What does it mean that a fund is frozen? When a fund is frozen, it means the fund will no longer accept new investments into the fund. Existing balances in the fund will remain invested in the fund until the participant requests an exchange out of the fund or a distribution is requested. When the market closes (generally 4:00 p.m. Eastern time) on December 30, 2016, the Managed Income Portfolio II Class 2 will be frozen to new contributions. As a result, all future contributions will be transferred to the new investment option. If you currently have a balance in the Managed Income Portfolio II Class 2, your balance will remain invested in this investment option. Contributions directed to this investment option prior to 4:00 p.m. Eastern time + Managed Income Portfolio II Class 2 Expense Ratio*: 0.47% Contributions directed to this investment option after to 4:00 p.m. Eastern time + Prudential Guaranteed Income Fund Expense Ratio*:0.00% *Expense ratio as of 11/02/2016 How will the transfer of the Wells Fargo Stable Return Portfolio U and the Fidelity Money Market Trust Retirement Government Money Market Portfolio work? When the market closes (generally 4:00 p.m. Eastern time), the Wells Fargo Stable Return Portfolio U and Fidelity Money Market Trust Retirement Government Money Market Portfolio will no longer be available investment options in the 401(k) Plan. As a result, all existing balances in the Wells Fargo Stable Return Portfolio U will be transferred to the new investment option, Prudential Guaranteed Income Fund. In addition, all existing balances and future contributions in the Fidelity Money Market Trust Retirement Government Money Market Portfolio will be transferred to the new investment option, Prudential Guaranteed Income Fund. Please refer to the chart below for details. The transfer of balances will appear as an exchange in your account history and quarterly statement. You may also receive a prospectus as a result of this transaction. Balance(s) and/or contributions directed to this investment option prior to 4:00 p.m. Eastern time + Wells Fargo Stable Return Portfolio U Expense Ratio*: 0.673% Balance(s) and/or contributions directed to this investment option after 4:00 p.m. Eastern time + Prudential Guaranteed Income Fund Expense Ratio*:0.00% Fidelity Money Market Trust Retirement Government Money Market Portfolio Ticker: FGMXX Expense Ratio*:0.42% *Expense ratio as of 11/02/2016 Prudential Guaranteed Income Fund Expense Ratio*:0.00% + The dates shown are based on the timing and accuracy of a variety of factors, including the transfer of data, receipt of instructions, and receipt of assets. Changes in any of these factors may result in changes to the dates and timing, including the dates on which, and thus the prices at which, assets in your account are sold and/or reinvested. Page 3 of 6

4 What if I do not want to invest in the new investment option? If you do not want your current balance and/or future contributions to be transferred to the Prudential Guaranteed Income Fund as outlined above and on the previous pages, you must contact Fidelity before the market closes (generally 4:00 p.m. Eastern time) to make the necessary changes to your account. You may contact Fidelity by accessing your account on-line via NetBenefits or by calling the toll-free number to speak with a Representative. Online: Phone: Call Fidelity at , Monday through Friday, between 8 a.m. and midnight Eastern time. What dates do I need to remember? December 29, :00pm December 30, :00 p.m. Eastern time For contribution changes to be reflected in your first paycheck of 2017, requests must be submitted before this deadline. This is the deadline to: Transfer balances invested in the Wells Fargo Stable Return Portfolio U Change contributions for Managed Income Portfolio II Class 2 Transfer balances and change contributions invested in the Fidelity Money Market Trust Retirement Government Money Market Portfolio The Prudential Guaranteed Income Fund will be an available investment option in the 401(k) Plan. This means that: January 3, 2017 Contributions and balances that were invested in the Fidelity Money Market Trust Retirement Government Money Market Portfolio will be directed to invest in the Prudential Guaranteed Income Fund. Contributions that were invested in the Managed Income Portfolio II Class 2 will be directed to invest in the Prudential Guaranteed Income Fund. Balances invested in the Wells Fargo Stable Return Portfolio U will be invested in the Prudential Guaranteed Income Fund. January 3, 2017 The Employer Match will be made on a quarterly basis and the vesting schedule will change to a 3-year graded schedule. Investment Option Description Prudential Guaranteed Income Fund Objective: The Prudential Guaranteed Income Fund (Pru GIF) is a stable value insurance product designed to provide competitive, stable returns and a full guarantee* of principal and accumulated interest. Page 4 of 6

5 Strategy: Risk: Short-term Redemption Fee Note: Who may want to invest: In order to support the Pru GIF's guarantees and its liability dynamics as well as to produce a desirable balance between interest crediting rate responsiveness and stability, the bulk of the portfolio is invested in investment grade fixed-income securities having intermediate-term maturities. The majority of these investments are in private placement bonds, commercial mortgages, and publicly traded securities such as U.S. Treasury bonds, mortgage-backed securities and corporate bonds. Duration is typically maintained between 2 to 3 years. The fund is backed by a diversified portfolio of fixed-income assets held in the general account of the issuer. Guarantees are subject to the claims paying ability of the issuer. Restrictions or fees may apply to exchanges or withdrawals. The Contracts provide for the payment of certain withdrawals and exchanges at book value during the terms of the Contracts. In order to maintain the Contract issuers' promise to pay such withdrawals and exchanges at book value, the Contracts subject the fund and its participants to certain restrictions. For example, withdrawals prompted by certain events (e.g., layoffs, early retirement windows, spin-offs, sale of a division, facility closings, plan terminations, partial plan terminations, changes in laws or regulations) may be paid at the market value of the fund's securities, which may be less than your book value balance or may restrict withdrawals in these events. Additional risk information for this product may be found in the prospectus or other product materials, if available. None Someone who seeks a slightly higher yield over the long term than is offered by money market funds, but who is willing to accept slightly more investment risk. Someone who is interested in balancing an aggressive portfolio with an investment that seeks to provide a declared crediting rate that is reset on a periodic basis. The Guaranteed Income Fund (GIF) is a group annuity product issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT Amounts contributed to the contract are deposited in PRIAC s general account. Payment obligations and the fulfillment of any guarantees specified in the group annuity contract are insurance claims supported by the full faith and credit of PRIAC. PRIAC periodically resets the interest rate credited on contract balances, subject to a minimum rate specified in the group annuity contract. Past interest rates are not indicative of future rates. This product is neither a mutual fund nor a bank product. The obligations of PRIAC are not insured by the FDIC or any other federal governmental agency. Contract form # GA-2020-IA-0805 or state variation thereof. Prudential Retirement is compensated in connection with this product when separate account investment returns exceed the interest credited on contract balances. Prudential Retirement may earn fee revenue in addition to the foregoing compensation if your plan has agreed to pay contract charges, which are sometimes paid in respect of plan and participant recordkeeping and distribution services. For some plans, Prudential Retirement uses a portion of its aggregate compensation to satisfy the plan's request for allowances and for payments to defray plan expenses. If Prudential Retirement s aggregate compensation from this product and from other plan investment products exceeds the costs of servicing your plan, Prudential Retirement earns a profit; otherwise they incur a loss. Frequent exchanging between plan investment options may harm long-term investors. Your plan or the plan s investment funds may have provisions to deter exchanges that may be abusive. These policies may require them to modify, restrict or suspend purchase or exchange privileges and/or impose redemption fees. All guarantees are based on the claims-paying ability of the issuing company. Past performance is not indicative of future performance. The investment option is an annuity. The fund is managed by Prudential Insurance Company of America. This description is only intended to provide a brief overview of the fund. *Guarantees are subject to the claims paying ability of PRIAC. This investment option is not a mutual fund. The declared interest rate will always be greater than or equal to 1.5% before the application of an asset charge. Page 5 of 6

6 For a mutual fund, the expense ratio is the total annual fund or class operating expenses (before waivers or reimbursements) paid by the fund and stated as a percentage of the fund s total net assets. Where the investment option is not a mutual fund, the figure displayed in the expense ratio field is intended to reflect similar information. However, it may have been calculated using methodologies that differ from those used for mutual funds. Mutual fund data has been drawn from the fund s prospectus. For nonmutual fund investment options, the information has been provided by the plan sponsor or investment option s manager or the trustee. When no ratio is shown for these options, it is because none was available. There may be fees and expenses associated with the investment option. Expense information changes periodically. Please consult NetBenefits for updates. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI FMR LLC. All rights reserved Page 6 of 6