Vanguard Asset Management Services - For Employee Benefit Plans


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Vanguard Asset Management Services - For Employee Benefit Plans

  1. 1. Vanguard Asset Management Services— ® For Employee Benefit Plans Investment expertise to help you manage your benefit plan assets benefit defined defined C O N T R I B U T I O N
  2. 2. 1 Sharing our strengths: Benefits of a partnership with Vanguard Managers of employee benefit plans managing your plan assets—expertise face an ongoing series of challenges. that will allow you to focus on the Among them: keeping up with other important tasks involved with demographic changes in their running your business. workforce, and instituting sound Because of our extensive experience investment policies to meet funding as a fiduciary, we’re thoroughly and withdrawal requirements arising familiar with the needs of plan from those changes. sponsors and the responsibilities you Vanguard can help. We’re one face. Indeed, Vanguard has earned of the world’s largest investment the trust of hundreds of organizations management firms, responsible for throughout the country. Our client- some $600 billion in assets. We’re also first philosophy is reflected in a one of the most respected because of commitment to low costs, which helps our reputation for integrity and for to ensure that the plan assets entrusted putting clients first in everything we to your care are managed skillfully do. As your partner, Vanguard can and efficiently. provide investment expertise in partner
  3. 3. 2 How we work with plan sponsors Vanguard provides a full range Managing your investments of investment management and prudently administrative services for employee We take a disciplined, time-tested, benefit plans. We can assist you by: and long-term approach to investing. Our more than 100 low-cost mutual Developing a customized funds—which include both index and investment policy statement actively managed funds—are run by We take the time to understand the world-class managers who are closely needs of plan sponsors and the monitored by Vanguard. challenges they face in managing the plan’s cash flows. The result: a long- Responding to your concerns term investment plan tailored to You can count on an experienced and your needs. highly trained investment manager to be available to discuss your needs and to respond to your concerns. Your dedicated investment professional will manage your plan’s portfolio and help you understand how different market conditions will affect your plan. Expertise
  4. 4. 3 Vanguard’s services at a glance Investment services for plan sponsors By analyzing your investment philosophy and objectives, we tailor a program to your needs. We do all of the following: Consult with you on an appropriate investment policy. Determine your optimal asset allocation. Recommend a customized, diversified portfolio of Vanguard® funds. Test the effect of different market conditions on plan assets. Manage your cash flow to meet expected funding and withdrawal requirements. Reallocate investments as the composition of your workforce changes. Provide quarterly updates of investment performance. Types of plans we manage Vanguard provides expert management for a variety of pooled asset-benefit plans, including: Defined benefit plans. Defined contribution plans, including profit-sharing and money purchase pension plans. Taft-Hartley plans. Health and welfare plans.
  5. 5. 4 Proven investment expertise Vanguard is an experienced manager Leadership in indexing of managers. We oversee investments Vanguard introduced index mutual in more than 100 stock, bond, funds for individuals in 1976, and balanced, and money market funds. we remain a leader in the field: We also provide convenient, one-stop We provide the broadest selection access to leading investment of stock, bond, and balanced index managers, both at Vanguard and at funds. Our index offerings include firms we hire from around the world. funds that span the entire stock This blend of internal and external market or the entire bond market, investment managers provides your while others target specific segments organization an unmatchable of each market (such as by investment combination of expertise and diversity style or market capitalization). Still of thought. others combine stocks and bonds in balanced index funds. Importantly, our index funds—all of which are Vanguard’s goal is to help you meet your fiduciary responsibility managed by Vanguard—feature some of the lowest expense ratios in the by ensuring that the assets in your benefit plan consist of funds industry,* which directly benefits our shareholders’ bottom line. managed by some of the world’s best advisors. You can be certain that these funds will stay true to their investment objectives and operate at the lowest reasonable cost. fiduciary *Source: Lipper Inc.
  6. 6. 5 A manager of world-class advisors About 60% of the assets in Vanguard® funds are actively managed by our internal and external advisors. Our external advisors—all of whom are highly respected and were selected only after undergoing a rigorous review process—bring a wide variety of independent thought. Moreover, these talented and seasoned managers bring a continuity of investment approach not easily found elsewhere. Their relationships with Vanguard, on average, are nearly twice the average industry tenure.* Some of our external advisors are: Barrow, Hanley, Mewhinney & Strauss, Inc. (Dallas, Texas) Chartwell Investment Partners (Berwyn, Pennsylvania) Grantham, Mayo, Van Otterloo & Co. LLC (Boston, Massachusetts) Marathon Asset Management Limited (London, United Kingdom) Mellon Capital Management Corporation (San Francisco, California) PRIMECAP Management Company (Pasadena, California) Sanford C. Bernstein & Co., LLC (New York, New York) Schroder Investment Management North America Inc. (London, United Kingdom) Wellington Management Company, LLP (Boston, Massachusetts) *Source: Morningstar, Inc., November 30, 2003.
  7. 7. 6 A major manager of fixed Our superior long-term performance income funds compared with other bond and money Vanguard is the nation’s largest market funds can be attributed largely manager of bond mutual funds and to our low-cost operating structure. one of the largest managers of money Because of the cost advantage this market funds.* Our fixed income structure provides, Vanguard’s fixed funds seek to outperform their income managers aren’t tempted to competitors over the long run, and, take risky, alternative strategies to almost without exception, they have. boost yields. (For the ten years ended September 30, 2003, all 29 of Vanguard’s actively Disciplined fund management managed money market and bond funds Whether managed internally or outperformed at least 80% of comparable externally, assets at Vanguard are mutual funds. Source: Lipper Inc. Funds invested exactly as promised. You with at least a 10-year history as of can count on our funds to stay true September 30, 2003, were included. Past to their stated objectives year after performance cannot be used to predict year, whatever the market conditions, future returns. Investment returns and and to remain immune to the fads principal value will fluctuate, so that that come and go in the investment investors’ shares, when sold, may be worth business. We make sure that our fund more or less than their original cost. For managers don’t take extra risks in a current performance, which may be higher drive for performance. or lower than that cited, visit our website Vanguard clearly specifies investment at mandates at the outset, hires advisors whose style and expertise support Our asset management services are designed to manage the those mandates, and then closely monitors fund management and growth of your plan assets with the objective of meeting your performance. required benefit payouts over the long term. *As of September 30, 2003. Source: Lipper Inc.
  8. 8. 7 Vanguard’s diverse fund lineup underscores a commitment to prudent asset management Vanguard funds . . . reflecting strength . . . and diversity of span the asset class in both active and passive thought among fund spectrum . . . management . . . managers. 8% 16% 32% 39% 51% 61% 68% 25% ■ Stock funds ■ Actively managed funds ■ Managed within ■ Bond funds ■ Index funds Vanguard ■ Balanced funds ■ Managed by external advisors ■ Money market funds Vanguard data as of September 30, 2003.
  9. 9. 8 A time-tested approach to investing plan assets Vanguard’s asset management services Creating your custom portfolio are based on sound, time-tested The development of your portfolio is investment principles. We don’t based on a clear understanding of the promote hot funds or follow trendy age distribution of your workforce, strategies. Instead, we apply a expected future payouts, and your risk proprietary methodology to create a profile. Our process includes the portfolio tailored to your long-term following: investment strategy, spending goals, and tolerance for risk. Investment policy consulting Starting with a top-down strategic We work with you to review your perspective, we allocate your funds current investment policy or to among the major asset classes— develop a policy that reflects your stocks, bonds, and (possibly) cash investment objectives. This can investments. This asset allocation include helping you define clear allows for adjustments based on objectives given expected changing circumstances, including contributions and withdrawals, important changes in the financial and risk tolerance. markets. Within each asset class, we emphasize broad diversification to Strategic asset allocation analysis further temper long-term portfolio We determine the best mix of volatility. Only then do we recommend assets consistent with your plan’s specific Vanguard investments. demographics, goals, and risk profile. We consider your current holdings, contribution and withdrawal requirements, asset-class returns, and inflation. We test and analyze the interaction of these factors on your objectives over a broad range of economic cycles. Finally, we confirm your tolerance for risk through a series of “what if ” analyses.
  10. 10. 9 Portfolio development Custom reporting After determining a strategic asset Our detailed quarterly performance allocation, we undertake further reports make it easy for you to analysis to choose an appropriate monitor your portfolio. Each report subasset allocation. This involves includes a discussion of asset diversifying within each asset class. allocation, comprehensive With equities, for example, we performance and financial market consider funds that invest in growth information, and (if you receive trust and value stocks; funds that invest services) a detailed account of trust in small-, medium-, and large- activity. These timely, concise reports capitalization firms; and funds that provide an excellent basis for invest in the United States and presentations to plan trustees or abroad. In bond funds, our subasset your investment committee. allocation process considers factors such as maturity and credit quality. Comprehensive analysis As a final step, we select specific We also take a broader look at the Vanguard funds—both index and progress of your portfolio. Each year actively managed. we perform a comprehensive review of your investment assets and verify Ongoing portfolio management that investment objectives are We will continually monitor your consistent with expected workforce portfolio to ensure that your program demographics and cash flows. remains suitable. This includes managing your cash flows and rebalancing assets when needed because of market developments or changes in objectives or circumstances. We also provide the following:
  11. 11. 10 Attentive, personalized service Your personal day-to-day contact Underscoring the importance we place at Vanguard will be a dedicated on service is the unusually low ratio of investment manager. The goal of clients assigned to each client team. Vanguard’s experienced investment Our investment managers are salaried managers is to understand each plan and receive no commissions or extra sponsor’s unique needs and to be compensation for making specific readily available to answer questions recommendations. Their job, quite and discuss concerns. simply, is to serve your organization’s All our investment managers have long-term interests. extensive education and training, and considerable experience in the financial services industry. As a Vanguard client, you will draw not only on the full range of resources we offer but also on our extensive expertise in managing employee plan assets. Client Focus
  12. 12. 11 Why Vanguard stands apart The Vanguard Group has never been World-class expertise a typical investment management Our investment management team company. We offer a unique includes some of the most experienced combination of benefits, including: asset managers in the industry. Industry leadership Responsibility—and stability With some $600 billion in assets Because of our unique corporate invested in more than 17 million structure, we have no obligation to shareholder accounts, Vanguard is generate profits for outside owners. one of the largest investment Vanguard is owned by its funds and management companies. exists only to serve their shareholders. This is what drives us to put our Diverse investment choices clients first in everything we do, We offer more than 100 actively including returning all profits to managed and index funds—one of the shareholders by keeping expenses low. most diverse fund selections available. Commitment to low costs Vanguard is widely recognized for its Plan sponsors can benefit from the unparalleled strengths leadership in keeping operating costs at the lowest reasonable levels The Vanguard Group has to offer. We bring exceptional, without sacrificing service quality. Keeping costs as low as possible is client-centered service, disciplined investment expertise, and especially important for plan sponsors, which—as fiduciaries— an unrivaled reputation for integrity and effective stewardship. must demonstrate prudence and efficiency in the management of assets entrusted to them.
  13. 13. 12 An invitation from Vanguard Plan sponsors who choose Vanguard Please call us if you have questions or to manage their investment assets would like more information. We’re expect us to deliver competitive available at1-800-335-2412 on business long-term performance—based on a days from 8:30 a.m. to 6 p.m., Eastern consistent, risk-sensitive investment time. We look forward to helping your approach—and exceptional client organization achieve its goals. service, all at the lowest possible cost. This extraordinary value we provide for investors stems naturally from Vanguard’s corporate structure, which aligns our interests with yours. We invite you to learn more about the advantages of Vanguard’s asset management services, and how we can help you fulfill your fiduciary responsibility. 800. 335.2412
  14. 14. Vanguard Asset Management Services Post Office Box 709 Valley Forge, PA 19482-0709 World Wide Web Toll-Free Information 1-800-335-2412 Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered trust company operated under the supervision of the Office of the Comptroller of the Currency. For more complete information about Vanguard funds, contact us or visit to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read it carefully before investing. © 2004 The Vanguard Group, Inc. All rights reserved ERISA 012004
  15. 15. Vanguard® Asset Management Services A message to sponsors of employee benefit plans Organizations such as yours want their plan assets managed at the lowest reasonable cost and with the lowest risk. The Vanguard Group—one of the world’s leading investment management companies—can help your organization reach its goals through our unique combination of competitive long-term performance, high-quality service, and low costs. Moreover, Vanguard is keenly aware of the financial needs of organizations such as yours because of our extensive experience managing the assets of ERISA-qualified plans and other benefit plans. We can manage your plan assets through Vanguard Asset Management Services, which provides investment policy consulting, asset allocation analysis, portfolio management, and customized reporting. Our dedicated investment managers are sensitive to the funding needs of each client, so we tailor our asset management services to your specific investment philosophy and risk tolerance, and to your plan’s expected contributions and withdrawals. Importantly, clients tell us that what they value most about Vanguard is that we are a partner they can trust. I have enclosed a brochure that describes our services in detail. If you have questions, we welcome your call at 1-800-335-2412. Or, if you prefer, complete and return the enclosed questionnaire, and we’ll contact you—no obligation, of course. I hope you’ll give the skilled professionals of Vanguard Asset Management Services an opportunity to help your organization achieve its goals. Sincerely, Jack Brod Principal Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered trust company operated under the supervision of the Office of the Comptroller of the Currency. Vanguard Asset Management Services Post Office Box 709, Valley Forge, Pennsylvania 19482-0709 World Wide Web— © 2004 The Vanguard Group, Inc. All rights reserved. EKPL 012004
  16. 16. Vanguard Asset ® Management Services investment profile of your organization
  17. 17. Completing this questionnaire will provide Vanguard Asset Management Services with the information we need to evaluate your needs effectively. (You will be under no obligation by completing this questionnaire.) If you have questions, call us at 1-800-335-2412.
  18. 18. Core Data 1. Type of organization: ■ Endowment ■ Foundation ■ Corporation ■ Association ■ Qualified Retirement Plan ■ Trust ■ Other (please specify) 2. Name of organization: Tax identification number 3. Does your organization have a website? ■ Yes ■ No If yes, what is the address? 4. Your name: 5. Primary contact at organization: Name Telephone number (day) Telephone number (evening) Fax number E-mail address Address City State Zip 1
  19. 19. Investment Assets 1. What is the total value of your organization’s investable assets? $ Provide a brief description of your organization’s purpose and the intended use of the assets. If you have an investment policy statement, please enclose a copy. 2. Which of the words below best describes the risk tolerance for these assets? ■ Conservative ■ Moderate ■ Aggressive 3. Provide the following investment information, if known: Return objective Benchmark indexes Time horizon 4. How much of the assets would you like Vanguard to manage? $ 5. Are any of the assets currently invested with Vanguard? ■ Yes ■ No If yes, what is the value of those assets? $ 6. Do you wish to transfer any outside assets to Vanguard? ■ Yes ■ No If yes, please attach a current statement for these assets. 7. Are the assets subject to any income or capital gains taxes? ■ Yes ■ No If yes, please specify. 2
  20. 20. Other Financial Information 1. Describe your organization’s historical and anticipated cash flows. Contributions ($ or %) Withdrawals ($ or %) Anticipated annual amount Historical amount Last year Two years ago Three years ago 2. Describe restrictions on spending from your portfolio. 3. Describe significant changes to contributions or withdrawal rates that you expect in the future. 4. Describe liquidity needs not mentioned above that we should know about. 5. If your organization has a qualified retirement plan, list the type of plan (e.g., profit-sharing plan, money purchase plan, defined benefit plan). Number of participants Average age of participants 3
  21. 21. Additional Information Thank you for taking the time to complete this questionnaire. The more accurate and complete the information you provide, the better we can tailor your investment program to your organization’s specific financial situation. Use the space below to provide any additional information not already captured in this profile, or to tell us about other issues or planning concerns you may have. Signature Date 4
  22. 22. ® ® Vanguard Asset Management Services Post Office Box 709 Valley Forge, PA 19482-0709 World Wide Web Toll-Free Information 1-800-335-2412 Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered trust company operated under the supervision of the Office of the Comptroller of the Currency. © 2004 The Vanguard Group, Inc. All rights reserved. QAMT 032004