the reed elsevier us salary investment plan (sip) the reed elsevier us salary investment plan (sip)

Download The Reed Elsevier US Salary Investment Plan (SIP) The Reed Elsevier US Salary Investment Plan (SIP)

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The Reed Elsevier US Salary Investment Plan (SIP) The Reed Elsevier US Salary Investment Plan (SIP) Slide 2 Eligible after 3 months Before-Tax and After-Tax Savings Maximum contribution 20%* 50% Company Match on the first 6% of Before-Tax and After-Tax Contributions taken from your pay. One year vesting on company matching contributions Eligible employees will be automatically enrolled in plan at a 2% Before-tax contribution rate which will be invested in the YES fund. Loans/Withdrawals (3 loans available) Eligible after 3 months Before-Tax and After-Tax Savings Maximum contribution 20%* 50% Company Match on the first 6% of Before-Tax and After-Tax Contributions taken from your pay. One year vesting on company matching contributions Eligible employees will be automatically enrolled in plan at a 2% Before-tax contribution rate which will be invested in the YES fund. Loans/Withdrawals (3 loans available) * HCEs are limited to 10% before tax; 2% after tax SIP Plan Highlights Slide 3 Invest in 13 SIP Core Funds, 3 Core Asset Allocation Funds, the Advice Account and a Self-Managed Brokerage Account Invest in 1% increments (for a total of 100%) Change investment increments at any time by calling the Reed Elsevier Information Line: Invest in 13 SIP Core Funds, 3 Core Asset Allocation Funds, the Advice Account and a Self-Managed Brokerage Account Invest in 1% increments (for a total of 100%) Change investment increments at any time by calling the Reed Elsevier Information Line: ( 1-800-448-5189) or through the web site at: http://resip.csplans.com ( 1-800-448-5189) or through the web site at: http://resip.csplans.com Investment Allocations Slide 4 Access daily information on accounts Transfer money among funds; change contribution percentages and investment elections Initiate and model a loan or distribution Review fund performance Review interactive calculators Use the educational resource center Speak to a Participant Services Representative (Mon Fri 9 5 ET) Access daily information on accounts Transfer money among funds; change contribution percentages and investment elections Initiate and model a loan or distribution Review fund performance Review interactive calculators Use the educational resource center Speak to a Participant Services Representative (Mon Fri 9 5 ET) Phone:1-800-448-5189 http://resip.csplans.comhttp://resip.csplans.com (new address) Phone:1-800-448-5189 http://resip.csplans.comhttp://resip.csplans.com (new address) Automated Phone System and Internet Website Slide 5 SIP Website http://resip.csplans.com Slide 6 Which of the following could be considered 401(k) investment mistakes? a) Failure to contribute enough to receive the maximum match b) Borrowing from your 401(k) c)Trying to time the market d) all of the above Which of the following could be considered 401(k) investment mistakes? a) Failure to contribute enough to receive the maximum match b) Borrowing from your 401(k) c)Trying to time the market d) all of the above Slide 7 The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) is great news for 401(k) plans since it allows for more flexibility in SIP. Effective January 1, 2002, here are some of the EGTRRA related changes to SIP: The before-tax contribution limit will increase to $11,000 per year. If you are age 50 or older by the calendar year end, you may defer additional savings ($1,000 for 2002) Annual compensation recognized under SIP will increase to $200,000 in 2002 The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) is great news for 401(k) plans since it allows for more flexibility in SIP. Effective January 1, 2002, here are some of the EGTRRA related changes to SIP: The before-tax contribution limit will increase to $11,000 per year. If you are age 50 or older by the calendar year end, you may defer additional savings ($1,000 for 2002) Annual compensation recognized under SIP will increase to $200,000 in 2002 EGTRRA Related Changes Slide 8 When you file your federal tax return, you may be able to take a tax credit for a portion of the SIP contributions you make to the plan. Hardship withdrawals taken after January 1, 2002 will result in a 6 month suspension from contributions, down from a 1 year suspension. More restrictive loan regulations for loans taken after January 1, 2002. When you file your federal tax return, you may be able to take a tax credit for a portion of the SIP contributions you make to the plan. Hardship withdrawals taken after January 1, 2002 will result in a 6 month suspension from contributions, down from a 1 year suspension. More restrictive loan regulations for loans taken after January 1, 2002. EGTRRA Related Changes Slide 9 Automatic True up of matching Company Contributions the Company will deposit any missed Company-matching contributions due to IRS limits on contributions If you are taking your PIP benefit as an annuity, you can roll over your SIP distribution to PIP, where it will be combined with your PIP annuity Automatic True up of matching Company Contributions the Company will deposit any missed Company-matching contributions due to IRS limits on contributions If you are taking your PIP benefit as an annuity, you can roll over your SIP distribution to PIP, where it will be combined with your PIP annuity Company Initiated Changes Slide 10 Preserve Your Investments With Cash Equivalents Savings vehicle that typically earns a fixed interest rate: Money market funds Treasury bills Savings account Commercial papers Certificates of deposit (CD) Whats the biggest risk? Inflation risk Savings vehicle that typically earns a fixed interest rate: Money market funds Treasury bills Savings account Commercial papers Certificates of deposit (CD) Whats the biggest risk? Inflation risk Slide 11 Generate Income With Bonds Loan agreement between an investor and issuer in which the issuer repays the principal plus interest: Government bonds Corporate bonds Municipal bonds International bonds What are the biggest risks? Interest rate risk and credit risk Loan agreement between an investor and issuer in which the issuer repays the principal plus interest: Government bonds Corporate bonds Municipal bonds International bonds What are the biggest risks? Interest rate risk and credit risk Slide 12 Grow Your Investment With Stocks Represents ownership in a company: Large company stocks Mid-sized company stocks Small company stocks International stocks Whats the biggest risk? Market risk Represents ownership in a company: Large company stocks Mid-sized company stocks Small company stocks International stocks Whats the biggest risk? Market risk Slide 13 * In U.S. Dollars 2000 Denmark 1999 Finland 1998 Finland 1997 Italy 1996 Spain 1995 Switzerland 1994 Finland 1993-91 Hong Kong Best Performing Equity Markets in the Past 10 Years Slide 14 Hypothetical value of $1 invested at year-end 1925. Assumes reinvestment of income and no transaction costs or taxes. 1925-2000 3.1% $0 $1 $10 $100 $1,000 $10,000 192519351945195519651975 19852000 $10 Ending Wealth Average Return Inflation $173.8% Treasury Bills $495.3% Government Bonds $6,40212.4% Small Company Stocks $2,58711.0% Large Company Stocks $173.8% $495.3% $2,58711.0% Past performance is no guarantee of future results. 3/1/2001. 2001 Ibbotson Associates, Inc. Stocks, Bonds, Bills, and Inflation Slide 15 Attempts to mirror a broad-based index Generally low transaction and management costs Attempts to mirror a broad-based index Generally low transaction and management costs Managers actively pick securities Attempts to outperform an index / benchmark Usually subject to higher investment management fees Managers actively pick securities Attempts to outperform an index / benchmark Usually subject to higher investment management fees Passive / Index Investing Active Investing V E R S U S Types of Strategies Slide 16 INDICES An indicator of market performance Passive Investing 91- day T- bills Money loaned for the short-term (91 days) Lehman Brothers Aggregate Bond Index (LBAG) 5,000 high quality bonds Dow Jones Industrial Average (DJIA) 30 bluechip stocks 91- day T- bills Money loaned for the short-term (91 days) Lehman Brothers Aggregate Bond Index (LBAG) 5,000 high quality bonds Dow Jones Industrial Average (DJIA) 30 bluechip stocks Slide 17 Passive Investing S&P 500 Index 500 large U.S. companies Russell 2000 Index 2,000 small U.S. companies Morgan Stanley Capital International -Europe, Australia, Far East (MSCI-EAFE) 1,000 international companies S&P 500 Index 500 large U.S. companies Russell 2000 Index 2,000 small U.S. companies Morgan Stanley Capital International -Europe, Australia, Far East (MSCI-EAFE) 1,000 international companies INDICES An indicator of market performance Slide 18 Value stock investing Active Investing Uses research models in an attempt to select stocks that are currently undervalued with regard to their market price and/or earnings potential. Slide 19 Is not as focused on the price of the stock today, but rather what the company is doing in terms of new product development, cost cutting measures, new divisions or expansion, industry leadership, etc. Growth stock investing Active Investing Slide 20 Participant recognition Listed in the newspaper Available to the general public Participant recognition Listed in the newspaper Available to the general public Available to institutional clients Not listed in the newspaper Typically lower fees Available to institutional clients Not listed in the newspaper Typically lower fees Mutual Funds Institutional Funds V E R S U S Types of Funds Slide 21 Core Investment Options More Investment Assistance Less Investment Assistance The Advice Account (5 Investment Funds) Self Managed Brokerage Account 3 Core Asset Allocation Funds Reed Elsevier SIP Fund Line-Up Slide 22 More Risk/Higher Potential Return Less Risk/Lower Potential Return Reed International P.L.C. Stock Fund Else