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

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Presentation on theme: "The Reed Elsevier US Salary Investment Plan (SIP) The Reed Elsevier US Salary Investment Plan (SIP)"— Presentation transcript:

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

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

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: ( ) or through the web site at: ( ) or through the web site at: Investment Allocations

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: (new address) Phone: (new address) Automated Phone System and Internet Website

5 SIP Website

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

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

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, 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, EGTRRA Related Changes

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

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) What’s 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) What’s the biggest risk? Inflation risk

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

12 Grow Your Investment With Stocks Represents ownership in a company: Large company stocks Mid-sized company stocks Small company stocks International stocks What’s the biggest risk? Market risk Represents ownership in a company: Large company stocks Mid-sized company stocks Small company stocks International stocks What’s the biggest risk? Market risk

13 * In U.S. Dollars 2000 Denmark 1999 Finland 1998 Finland 1997 Italy 1996 Spain 1995 Switzerland 1994 Finland Hong Kong Best Performing Equity Markets in the Past 10 Years

14 Hypothetical value of $1 invested at year-end Assumes reinvestment of income and no transaction costs or taxes % $0 $1 $10 $100 $1,000 $10, $10 Ending Wealth Average Return Inflation $173.8% Treasury Bills $495.3% Government Bonds $6, % Small Company Stocks $2, % Large Company Stocks $173.8% $495.3% $2, % Past performance is no guarantee of future results. 3/1/2001. © 2001 Ibbotson Associates, Inc. Stocks, Bonds, Bills, and Inflation

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

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

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

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.

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

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

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

22 More Risk/Higher Potential Return Less Risk/Lower Potential Return Reed International P.L.C. Stock Fund Elsevier NV Stock Fund Putnam OTC & Emerging Growth SSgA Emerging Markets Fund Putnam Voyager Fund Janus Worldwide Fund SSgA Russell 2000 Index Dresdner RCM Large Cap Growth Fund Templeton Foreign Fund SSgA S&P 500 Index Fund American Funds Fundamental Investors Fund SSgA Aggressive Asset Allocation Fund SSgA Moderate Asset Allocation Fund SSgA Conservative Asset Allocation Fund SSgA Bond Market Index Fund SSgA Yield-Enhanced Short-Term Investment Fund (YES) Reed International P.L.C. Stock Fund Elsevier NV Stock Fund Putnam OTC & Emerging Growth SSgA Emerging Markets Fund Putnam Voyager Fund Janus Worldwide Fund SSgA Russell 2000 Index Dresdner RCM Large Cap Growth Fund Templeton Foreign Fund SSgA S&P 500 Index Fund American Funds Fundamental Investors Fund SSgA Aggressive Asset Allocation Fund SSgA Moderate Asset Allocation Fund SSgA Conservative Asset Allocation Fund SSgA Bond Market Index Fund SSgA Yield-Enhanced Short-Term Investment Fund (YES) Core Investment Options

23 YTD1 Year3 Years*5 Years* SSgA Yield-Enhanced Money Market Tier I YTD1 Year3 Years*5 Years* SSgA Yield-Enhanced Money Market Tier I Objective: Seeks to match or exceed returns of the Money Fund Report for money market fund mutual funds characterized as “Tier One.” Strategy: Invests in high-quality money market securities and other short-term debt instruments such as corporate and government securities. Performance (as of 12/31/01): Objective: Seeks to match or exceed returns of the Money Fund Report for money market fund mutual funds characterized as “Tier One.” Strategy: Invests in high-quality money market securities and other short-term debt instruments such as corporate and government securities. Performance (as of 12/31/01): SSgA Yield Enhanced Short-Term Investment Fund (YES)

24 YTD1 Year3 Years*5 Years* SSgA Bond Market Index Fund Lehman Brothers Aggregate Bond Index YTD1 Year3 Years*5 Years* SSgA Bond Market Index Fund Lehman Brothers Aggregate Bond Index Objective: Seeks to match the returns of the Lehman Brothers Aggregate Bond Index. Strategy: Invests primarily in government, corporate, mortgage- backed and asset-backed securities. Performance (as of 12/31/01): Objective: Seeks to match the returns of the Lehman Brothers Aggregate Bond Index. Strategy: Invests primarily in government, corporate, mortgage- backed and asset-backed securities. Performance (as of 12/31/01): SSgA Bond Market Index Fund

25 Objective: Provide income from fixed income securities and some growth of principal from stock funds. Strategy: This fund has an asset allocation target of 75% fixed income securities, 15% large cap stock, 5% small/mid cap stock, and 5% international stock. Objective: Provide income from fixed income securities and some growth of principal from stock funds. Strategy: This fund has an asset allocation target of 75% fixed income securities, 15% large cap stock, 5% small/mid cap stock, and 5% international stock. You may want to consider this fund if: You are comfortable with some market risk You want stable income with controlled risk and some long term growth You have a medium term investment time frame You are comfortable with some market risk You want stable income with controlled risk and some long term growth You have a medium term investment time frame SSgA Conservative Asset Allocation Fund

26 Objective: Provide income from fixed income securities and growth of principal from stock funds. Strategy: This fund has an asset allocation target of 45% fixed income securities, 35% large cap stock, 10% small/mid cap stock, and 10% international stock. Objective: Provide income from fixed income securities and growth of principal from stock funds. Strategy: This fund has an asset allocation target of 45% fixed income securities, 35% large cap stock, 10% small/mid cap stock, and 10% international stock. You may want to consider this fund if: You are comfortable with moderate market risk You want to achieve long-term growth and stable income You have a medium to longer term investment time frame You are comfortable with moderate market risk You want to achieve long-term growth and stable income You have a medium to longer term investment time frame SSgA Moderate Asset Allocation Fund

27 Objective: The fund seeks to provide growth of principal from stock funds and some income from fixed income securities. Strategy: This fund has an asset allocation target of 15% fixed income securities, 55% large cap stock, 15% small/mid cap stock, and 15% international stock. Objective: The fund seeks to provide growth of principal from stock funds and some income from fixed income securities. Strategy: This fund has an asset allocation target of 15% fixed income securities, 55% large cap stock, 15% small/mid cap stock, and 15% international stock. You may want to consider this fund if: You are comfortable with more risk and greater short term changes in market value You want maximum growth potential You have a longer term investment time frame You are comfortable with more risk and greater short term changes in market value You want maximum growth potential You have a longer term investment time frame SSgA Aggressive Asset Allocation Fund

28 YTD1 Year3 Years*5 Years* American Funds Fundamental Investors Fund Russell 1000 Value Index YTD1 Year3 Years*5 Years* American Funds Fundamental Investors Fund Russell 1000 Value Index Objective: Seeks long-term growth of capital and income. Strategy: Invests in common stocks that appear to offer solid growth potential at reasonable prices. The fund may also invest significantly in non-U.S. securities. Performance (as of 12/31/01): Objective: Seeks long-term growth of capital and income. Strategy: Invests in common stocks that appear to offer solid growth potential at reasonable prices. The fund may also invest significantly in non-U.S. securities. Performance (as of 12/31/01): American Funds Fundamental Investors Fund

29 YTD1 Year3 Years*5 Years* SSgA S&P Index Fund S&P 500 Index YTD1 Year3 Years*5 Years* SSgA S&P Index Fund S&P 500 Index Objective: Seeks to match the performance of the Standard & Poor’s 500 Index. Strategy: Invests in all 500 stocks in the S&P 500 Index in proportion to their weighting in the Index. Performance (as of 12/31/01): Objective: Seeks to match the performance of the Standard & Poor’s 500 Index. Strategy: Invests in all 500 stocks in the S&P 500 Index in proportion to their weighting in the Index. Performance (as of 12/31/01): SSgA S&P 500 Index Fund

30 YTD1 Year3 Years*5 Years* Templeton Foreign Fund MSCI-EAFE Index YTD1 Year3 Years*5 Years* Templeton Foreign Fund MSCI-EAFE Index Objective: Seeks long-term capital growth. Strategy: Invests primarily in stocks issued outside the U.S., including the emerging markets. Performance (as of12/31/01): Objective: Seeks long-term capital growth. Strategy: Invests primarily in stocks issued outside the U.S., including the emerging markets. Performance (as of12/31/01): Templeton Foreign Fund

31 YTD1 Year3 Years*5 Years* Dresdner RCM Large Cap Russell 1000 Growth Index YTD1 Year3 Years*5 Years* Dresdner RCM Large Cap Russell 1000 Growth Index Objective: Seeks long-term capital appreciation. Strategy: The fund invests in equity securities of U.S. companies with at least 3 billion in market capitalization and focuses on companies that it expects to have higher than average rates of growth and strong potential for capital appreciation. Performance (as of 12/31/01): Objective: Seeks long-term capital appreciation. Strategy: The fund invests in equity securities of U.S. companies with at least 3 billion in market capitalization and focuses on companies that it expects to have higher than average rates of growth and strong potential for capital appreciation. Performance (as of 12/31/01): Dresdner RCM Large Cap Growth Fund

32 YTD1 Year3 Years*5 Years* SSgA Russell Index Fund Russell 2000 Index YTD1 Year3 Years*5 Years* SSgA Russell Index Fund Russell 2000 Index Objective: Seeks to match the performance of the Russell 2000 Index. Strategy: Invests in all 2,000 stocks in the Russell 2000 Index in proportion to their weighting in the index. Performance (as of 12/31/01): Objective: Seeks to match the performance of the Russell 2000 Index. Strategy: Invests in all 2,000 stocks in the Russell 2000 Index in proportion to their weighting in the index. Performance (as of 12/31/01): SSgA Russell 2000 Index Fund

33 Janus Worldwide Fund MSCI World Index Janus Worldwide Fund MSCI World Index Objective: The fund seeks capital appreciation. Strategy: This fund invests primarily in a mix of foreign and domestic companies, although it has generally invested a majority of its assets abroad. Stocks are selected one at a time, often with an emphasis on high-quality growth franchises believed to be trading at reasonable prices. Performance (as of 12/31/01): Objective: The fund seeks capital appreciation. Strategy: This fund invests primarily in a mix of foreign and domestic companies, although it has generally invested a majority of its assets abroad. Stocks are selected one at a time, often with an emphasis on high-quality growth franchises believed to be trading at reasonable prices. Performance (as of 12/31/01): Janus Worldwide Fund YTD1 Year3 Years*5 Years* YTD1 Year3 Years*5 Years*

34 YTD1 Year3 Years*5 Years* Putnam Voyager Fund Russell 1000 Growth YTD1 Year3 Years*5 Years* Putnam Voyager Fund Russell 1000 Growth Objective: Seeks capital appreciation. Strategy: Invest primarily in stocks of large and midsize companies across a wide range of industries, with a focus on growth stocks. The fund targets companies with sales and profits that Putnam believes are likely to grow faster than the overall economy Performance(as of 12/31/01): Objective: Seeks capital appreciation. Strategy: Invest primarily in stocks of large and midsize companies across a wide range of industries, with a focus on growth stocks. The fund targets companies with sales and profits that Putnam believes are likely to grow faster than the overall economy Performance(as of 12/31/01): Putnam Voyager Fund

35 YTD1 Year3 Years*5 Years* SSgA Emerging Markets Fund IFC Investable Index YTD1 Year3 Years*5 Years* SSgA Emerging Markets Fund IFC Investable Index Objective: Seeks capital appreciation. Strategy: Invests in stocks issued in various countries that have developing or emerging economies. Performance (as of 12/31/01): Objective: Seeks capital appreciation. Strategy: Invests in stocks issued in various countries that have developing or emerging economies. Performance (as of 12/31/01): SSgA Emerging Markets Fund

36 YTD1 Year3 Years*5 Years* Putnam OTC & Emerging Growth Fund Russell 2500 Growth YTD1 Year3 Years*5 Years* Putnam OTC & Emerging Growth Fund Russell 2500 Growth Objective: The fund seeks capital appreciation. Strategy: Invests primarily in common stocks of small to midsize companies believed to have exceptionally strong growth potential. The portfolio may include stocks that trade over-the- counter (OTC) as well as stocks of emerging growth companies listed on securities exchanges Performance(as of 12/31/01): Objective: The fund seeks capital appreciation. Strategy: Invests primarily in common stocks of small to midsize companies believed to have exceptionally strong growth potential. The portfolio may include stocks that trade over-the- counter (OTC) as well as stocks of emerging growth companies listed on securities exchanges Performance(as of 12/31/01): Putnam OTC & Emerging Growth Fund

37 YTD 1 Year 3 Years* 5 Years* Objective: The Fund provides participants with an opportunity to share in the investment performance of Reed International P.L.C. Strategy: The Fund is structured to provide the greatest level of investment of participants’ contributions of Reed International P.L.C. ADR, while holding a level of short-term investments deemed appropriate by the investment manager to meet the daily liquidity requirements of the fund. Objective: The Fund provides participants with an opportunity to share in the investment performance of Reed International P.L.C. Strategy: The Fund is structured to provide the greatest level of investment of participants’ contributions of Reed International P.L.C. ADR, while holding a level of short-term investments deemed appropriate by the investment manager to meet the daily liquidity requirements of the fund. *Annualized Reed International P.L.C. Stock Fund Performance (as of 12/31/01):

38 YTD1 Year3 Years*5 Years* Elsevier NV Stock Fund Objective: The Fund provides participants with an opportunity to share in the investment performance of Elsevier NV. Strategy: The Fund is structured to provide the greatest level of investment of participants’ contributions of Elsevier NV ADR, while holding a level of short-term investments deemed appropriate by the investment manager to meet the daily liquidity requirements of the fund. Performance (as of 12/31/01): Objective: The Fund provides participants with an opportunity to share in the investment performance of Elsevier NV. Strategy: The Fund is structured to provide the greatest level of investment of participants’ contributions of Elsevier NV ADR, while holding a level of short-term investments deemed appropriate by the investment manager to meet the daily liquidity requirements of the fund. Performance (as of 12/31/01): *Annualized

39 A brokerage account window that allows you to invest in individual stocks and bonds, as well as a wide range of mutual funds An alternative investment option within SIP Individual Brokerage Account designed for the knowledgeable investor Allows a participant the opportunity to build a broader portfolio through a wide array of investment choices The Self-Managed Account is managed by State Street Brokerage Services Inc. An alternative investment option within SIP Individual Brokerage Account designed for the knowledgeable investor Allows a participant the opportunity to build a broader portfolio through a wide array of investment choices The Self-Managed Account is managed by State Street Brokerage Services Inc. Self-Managed Account Option

40 You can benefit from personalized investment advice when: You want to know how much to save for your future You are not sure what your 401(k) account should be invested in You do not have time to keep tabs on your 401(k) plan investments You are concerned about planning for your financial future You want to know how much to save for your future You are not sure what your 401(k) account should be invested in You do not have time to keep tabs on your 401(k) plan investments You are concerned about planning for your financial future Is the Advice Account Right for Me?

41 When you call, an Advisor will review the following information with you: Investment accounts designated for retirement 401(k) plan(s) and pension plan(s) Social Security benefits available to you An estimate from your company’s pension plan An estimate of any other retirement income Investment accounts designated for retirement 401(k) plan(s) and pension plan(s) Social Security benefits available to you An estimate from your company’s pension plan An estimate of any other retirement income Advice Account Financial Information

42 The Advice Account Financial Advisor: Asks you a series of questions to build a personalized profile of your financial resources and retirement goals Explains the probability of reaching your goals with your current savings and investment strategy Recommends a personalized savings and investment plan for your 401(k) to help you improve the likelihood of reaching your goals Asks you a series of questions to build a personalized profile of your financial resources and retirement goals Explains the probability of reaching your goals with your current savings and investment strategy Recommends a personalized savings and investment plan for your 401(k) to help you improve the likelihood of reaching your goals The Advice Account Goal-Oriented Approach

43 Consider two SIP investors, Jane and John. Jane starts contributing at age 28 and socks away $2,000 a year for 7 consecutive years (a total of $14,000). John, also 28, thinks it's silly to begin saving for retirement at age 28. He starts at age 33 and contributes $2,000 for 30 years ($60,000). Both Jane and John earn an average return of 10 % per year. Who has more at age 65? a) Jane b) John c) Neither d) Who cares? How'd they get that return? Consider two SIP investors, Jane and John. Jane starts contributing at age 28 and socks away $2,000 a year for 7 consecutive years (a total of $14,000). John, also 28, thinks it's silly to begin saving for retirement at age 28. He starts at age 33 and contributes $2,000 for 30 years ($60,000). Both Jane and John earn an average return of 10 % per year. Who has more at age 65? a) Jane b) John c) Neither d) Who cares? How'd they get that return?

44 Start Early * Your returns may differ from the above mentioned 8% Jane Starting now... John 5 years later... $226,049 $132,683 Investing $100/month 10% annual return* Dollars in thousand s

45 Make the Most of Your 401(k) EMPLOYEE B EMPLOYEE C EMPLOYEE A Salary $25,000 $25,000 $25,000 Your deferral 4%6% 8% Company match 2%3%3% Twice monthly contribution $42 $63$83 Investment return 10% 10% 10% After 30 years Salary $25,000 $25,000 $25,000 Your deferral 4%6% 8% Company match 2%3%3% Twice monthly contribution $42 $63$83 Investment return 10% 10% 10% After 30 years $426,617 $521,420 $284,411

46 Add ’Em Together

47 Thank You!

48 Reed Elsevier U.S. Salary Investment Plan This presentation provides highlights. It does not describe many of the features, provisions, limitations, and exclusions that are contained in the documents and contracts that comprise the actual Plan. Although Reed Elsevier Inc. has made every effort to ensure that this presentation is consistent with the Plan document if there is any conflict or inconsistency between this presentation and the Plan document, the document, as construed and interpreted by Reed Elsevier, Inc., will govern. Reed Elsevier Inc. reserves the right to amend or terminate its benefit program at any time. If the benefit program is amended or terminated, you will be contacted by the Plan. Participation in the program does not create or imply an employment contract with Reed Elsevier Inc. or with any of its business units. Historical performance is not necessarily indicative of actual future performance which could differ substantially. This presentation provides highlights. It does not describe many of the features, provisions, limitations, and exclusions that are contained in the documents and contracts that comprise the actual Plan. Although Reed Elsevier Inc. has made every effort to ensure that this presentation is consistent with the Plan document if there is any conflict or inconsistency between this presentation and the Plan document, the document, as construed and interpreted by Reed Elsevier, Inc., will govern. Reed Elsevier Inc. reserves the right to amend or terminate its benefit program at any time. If the benefit program is amended or terminated, you will be contacted by the Plan. Participation in the program does not create or imply an employment contract with Reed Elsevier Inc. or with any of its business units. Historical performance is not necessarily indicative of actual future performance which could differ substantially.

49 Important Notes Today’s workshop was designed to: Provide you with fundamental information on your 401(k) Objectively highlight your fund options Outline other sources of information for your decisions This presentation does not constitute legal, investment or financial advice of any kind Please consult your own advisors for such advice Any fund performance illustrated in this presentation details historic returns and does not guarantee future investment returns of the funds reviewed Today’s workshop was designed to: Provide you with fundamental information on your 401(k) Objectively highlight your fund options Outline other sources of information for your decisions This presentation does not constitute legal, investment or financial advice of any kind Please consult your own advisors for such advice Any fund performance illustrated in this presentation details historic returns and does not guarantee future investment returns of the funds reviewed  1998 State Street Corporation. All rights reserved.

50 Important Notes All rates of return are annual rates of return Single taxpayer Tax deferred investments: Assumes reinvestment of earnings Income taxes will be due when you withdraw from your account at the tax rate in effect at the time Taxable investments: Pays taxes on earnings every year All rates of return are annual rates of return Single taxpayer Tax deferred investments: Assumes reinvestment of earnings Income taxes will be due when you withdraw from your account at the tax rate in effect at the time Taxable investments: Pays taxes on earnings every year All charts/scenarios assume the following (unless otherwise noted on slide):

51 Important Notes Please note that taxes would be due on any pre-tax savings and investment earnings when withdrawn at the tax rate in effect at the time. You may be subject to a 10% early withdrawal penalty if you are under age 59½. Please keep in mind that these slides present investment models only and that no two investors are alike. Relative risk will vary depending on actual portfolios and market conditions. Always consult a financial professional in determining your own risk tolerance and the allocation that best meets your personal investment needs. These illustrations are hypothetical and for demonstration purpose only, and are not necessarily indicative of the performance of any investment. Please note that taxes would be due on any pre-tax savings and investment earnings when withdrawn at the tax rate in effect at the time. You may be subject to a 10% early withdrawal penalty if you are under age 59½. Please keep in mind that these slides present investment models only and that no two investors are alike. Relative risk will vary depending on actual portfolios and market conditions. Always consult a financial professional in determining your own risk tolerance and the allocation that best meets your personal investment needs. These illustrations are hypothetical and for demonstration purpose only, and are not necessarily indicative of the performance of any investment. Withdraws of pre-tax money:

52 This program provides only a small taste of some of the features of the Reed Elsevier US Salary Investment Plan (SIP), and is intended to whet your appetite for more information about the plan. For more detailed information about the plan, you should sink your teeth into the Summary Plan Description of the SIP, which is available by logging onto or by calling Neither these few morsels about PIP nor the Summary Plan Description, however, takes the place of the applicable plan documents. Should any questions ever arise about eligibility or the nature and extent of your benefits from the SIP, the formal language of the plan documents as construed and interpreted by Reed Elsevier Inc. will govern. Reed Elsevier Inc. reserves the right to modify or terminate this plan at any time. This program provides only a small taste of some of the features of the Reed Elsevier US Salary Investment Plan (SIP), and is intended to whet your appetite for more information about the plan. For more detailed information about the plan, you should sink your teeth into the Summary Plan Description of the SIP, which is available by logging onto or by calling Neither these few morsels about PIP nor the Summary Plan Description, however, takes the place of the applicable plan documents. Should any questions ever arise about eligibility or the nature and extent of your benefits from the SIP, the formal language of the plan documents as construed and interpreted by Reed Elsevier Inc. will govern. Reed Elsevier Inc. reserves the right to modify or terminate this plan at any time.


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