The UMWA Cash Deferred Savings Plan of 1988
Understanding Your Investment Options
About this plan:
The UMWA Cash Deferred Savings plan of 1988 is a 401(k) plan that offers many advantages not available through other traditional means of saving.
You get a break on taxes, because the money you contribute comes out of your pay before most taxes are deducted and the interest your money earns continues to grow tax deferred, until you withdraw it.
You have the opportunity to choose how your money is invested, from six different investment options.
The Cash Deferred Savings Plan helps you set aside money today, so that you can plan for a secure future.
Choosing Your Invetment Is Important:
Control of your Cash Deferred Savings Plan investments is an important feature of the plan. For that reason, investment alternatives with varying degrees of risk and reward are available. You also have the ability to make changes in the way your current and future savings are invested.
The purpose of this packet is to give you the information you need to make informed investment decisions. It's important that you review the performance of your investments and your investment strategy on a regular basis.
The Cash Deferred Savings Plan is designed to comply with section 404 ( c ) of the Employee Retirement Income Security Act and Title 29 of the Code of Federal Regulations Section 2550.404c-1. This means that you , not the Board of Trustees or anyone else, control your investments. It also means that the plan fiduciaries may be relieved of liability for any losses that are a direct result of your control.
What Are Your Invetment Options:
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You may choose from the following six different investments options: |
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Calvert Social Investment Fund Money Market Portfolio; |
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UMWA JPMorgan Stable Value Fund; |
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Vanguard GNMA Fund; |
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UMWA 401(k) Balanced Fund; |
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Barclays Global Investors S&P 500 Equity Index Fund; and |
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Fidelity Equity-Income Fund |
Contained in this packet are descriptions of these investment options, including their:
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investment objectives; |
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relative risk and return characteristics; |
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type and diversification of assets; |
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investment managers; and |
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fees to buy or sell an option and annual operating expenses. |
What Other Information Is Available to You:
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- Additional information on the investment options is also available to you upon request. This includes:
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- information on the annual invetsment costs of each investment option and information on the annual administrative expenses of the plan;
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- current prospectuses on the following investment options, which are publicly available offered mutual funds: Calvert Social Investment Fund Money Market Portfolio; Vanguard GNMA Fund; and Fidelity Equity-Income Fund;
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- information on the underlying assets in the following investment options, which are not publicly offered mutual funds and which do not publish prospectuses: UMWA JPMorgan Stable Value Fund; UMWA 401 (k) Balanced Fund; and Barclays Global Investors S&P 500 Equity Index Fund;
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- copies of financial statements, reports and any other materials relating to the investment options, to the extent that they are made available to the plan;
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- information concerning the value of the shares or units in each of the investment options offered by the Cash Deferred Savings Plan, as well as the past and current investment performance of each of the investment options (the plan provides a quarterly statement showing performance information and the value of your account); and
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- information concerning the value of the shares or units in each of the investment options held in your own account.
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The Board of Trustees of the Cash Deferred Savings Plan is responsible for providing the above information to you when you request it. If you would like any of this additional information, you can call the Beneficiary Call Center at 1-800-291-1425 or write to:
UMWA Cash Deferred Savings Plan of 1988
UMWA Health and Retirement Funds
Suite 350
2121 K Street, NW
Washington , D.C. 20037
In addition to this information, the Vanguard GNMA Fund, and the Fidelity Equity-Income Fund have share prices listed in many newspapers. Information on these funds can also be found on investment websites (tickers VFIIX and FEQIX, respectively).
Voting and Tender Rights:
Any voting, tender or similar rights in the mutual funds are exercised on behalf of the plan by the plan administrator and do not pass through to the participants. Any voting, tender or similar rights in the non-mutual fund investments are exercised on behalf of the plan by the investment managers and do not pass through to the participants.
Changing Your Investments:
You may change your investment options for the future and/or past contributions up to four times each year, effective as of the first payday following January 1, April 1, July 1, or October 1. To make a change, you must complete a form and return it to the UMWA Health and Retirement Funds, no later than the first of the month before the first of the calendar quarter in which you want the change to take effect. Call the Beneficiary Call Center at 1-800-291-1425 to obtain the form, titled Application to Change Investment Option for the Future and/or Past Contributions. The form must be mailed to the following address:
UMWA Cash Deferred Savings Plan
UMWA Health and Retirement Funds
Suite 350
2121 K Street, NW
Washington , D.C. 20037
Restrictions on Changing Your Invetments:
Your investment in the Guaranteed Investment Contract (GIC) Fund may not be transferred directly to or from the Calvert Social Investment Fund Money Market Portfolio or the Vanguard GNMA Fund. Direct transfers to the GIC Fund may only be made from the UMWA 401 (k) Balanced Fund, the Barclays Global Investors Equity Index Fund and the Fidelity Equity-Income Fund. Similarly, direct transfers may only be made from the GIC Fund to the UMWA 401 (k) Balanced Fund, the Barclays Global Investors Equity Index Fund and the Fidelity Equity-Income Fund. The insurance companies that offer the GICs impose this restriction.
Key Terms and Concepts:
There are certain key terms and concepts that are used throughout this packet to describe your investment options. The following explanations are provided so that you can better understand your options.
Bonds - Organizations like the federal government and some private companies borrow money from the public to finance their operations. The loans are called bonds. They are bought by investors who want to receive a steady stream of interest income with repayment of their principal at the end of a certain period of time. That's why bonds are often referred to as fixed income investments.
Capital growth vs. income - These two key investment concepts refer to thedifferent ways in which your investment can grow. Capital growth refers to an increase in the value of the investment (e.g., a share of the stock becomes more valuable just as the market value of your house goes up). Income is the interest or dividends paid on your investment .
Over the short term, investments which focus on income are less volatile. Conversely, capital growth investments are more erratic and less certain. Over the long term the picture reverses, however, as investments that focus on capital growth enerally provide greater total return than those that emphasize income.
Money Market Instruments - These are fixed income investments which mature in less than one year. The most common investments are U.S. Treasury Bills, commercial paper (notes) issued by corporations, and large denomination certificates of deposit by banks.
Risk - Investment risk basically refers to the possibility that the investment will not turn out as expected. There are a number of reasons why this might happen. One possibility is that the "deal could not work out" (e.g. a bond will fail to pay interest or principal, or a company in which you own stock goes out of business) but these events are relatively rare and your investment options each consist of a diversified group of investments.
The most important risk is the risk that the value of your investment could go down in the financial markets. In the short run, a stock could increase in value if the company does well, or decline because of other market conditions. Bond prices could go down because interest rates available from new bonds are higher. The key consideration in moderating this type of risk is time.
There is yet another element of risk - the risk that your investments will not earnenough money over the long term to keep up with inflation.
Investing is a process of balancing these short and long term risks against the expected rewards. Your own needs should dictate how you manage your investments. Most investors have a range of needs and expected possible uses of their money and put parts of their savings in different types of investments.
Stocks - A stock is a type of investment that enables you to be a part owner in abusiness. If the company does well, the price of the stock should increase. If the company's profits are down, or the company operates at a loss, the value of your investment may reflect this decline or loss.
Total Return -Total return is the combination of interest from bonds,dividends from stocks, and changes in the market value of these investments over time.
Volatility - Volatility refers to the possibility that your investment .
Investment Options:
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