Phillips 66 Savings Plan

Plan Investments

The investments in your Savings Plan are organized into four tiers, each with a different investment strategy. No matter what level of investing experience you have, you can create a portfolio that fits your investment objective, time horizon, and comfort with risk.

Tier 1: Target-Date Investments
How to invest your money among stocks, bonds, and short-term reserves—now and as you grow older—is one of your most important financial decisions. Vanguard® Target Retirement Trusts Plus provide a professionally maintained, diversified mix of investments that shifts its emphasis to more conservative investments as the year of retirement nears.

Target-date investments are subject to the risks of their underlying funds. The year in the investment name refers to the approximate year (the target date) when an investor would retire and leave the workforce. The investment will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. A target-date investment is not guaranteed at any time, including on or after the target date.

If you choose this tier, consider making a single Target Retirement Trust your only plan investment. Why? Because a Target Retirement Trust is a broadly diversified asset mix on its own. Even though Target Retirement Trusts simplify the investment process, they still require some monitoring to ensure that the portfolio is in line with your current situation.

Consider choosing the trust with the date that’s closest to the year in which you expect to retire. If you are already retired, consider choosing Vanguard Target Retirement Income Trust Plus. This trust seeks to provide current income and some capital appreciation to retirees.

Tier 2: Index Investments
These investments can offer the basic ingredients for a well-balanced portfolio. Each one offers broad diversification and low costs. You can combine several to create a portfolio that suits you.

If you wish to create your own diversified asset mix, you may want to start with the funds in this tier. This tier consists of index funds, which can provide low-cost access to broad segments of the stock and bond markets.

Index funds, also known as passively managed funds, generally use a buy-and-hold strategy to try to track the performance of a given market. Why would anyone invest in an index fund and earn just what the market earns? Because index funds generally cost less to run than actively managed funds, whose managers try to outperform the market.

Note that the “market” represents all investor dollars. When some investors’ dollars outperform the market, other investors’ dollars must underperform. After subtracting fund costs—including management fees, administrative expenses, and trading commissions—actively managed funds can face difficulties over time just to keep pace with the market.

Tier 3: Active and Specialty Investments
The funds in this tier can help you fine-tune your portfolio with more specialized investments. They can be useful if you want to invest in a specific segment of the stock or bond markets. This tier also includes a money market fund and a stable value fund, which are conservative investments.

Remember that it’s difficult to identify which market segments are likely to outperform others. So you may want to consider using this tier as a supplement to the broader investments of Tier 2. Also keep in mind that funds in this tier may invest in some of the same companies as other investments in your plan, including those in other tiers. Make sure to check each investment's holdings if you'd prefer to avoid duplication.

Be sure to pay attention to fund costs. This tier includes actively managed funds, whose costs can vary significantly. You can get a sense of how much a fund costs to own by looking up its expense ratio in the fund’s prospectus. The higher the expense ratio, the more the fund spends to pay its bills.

Vanguard funds, on average, have an expense ratio less than one-fifth the industry average. Vanguard's average mutual fund expense ratio is 0.09%, while the industry average mutual fund expense ratio is 0.54%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.

Tier 4: Company Stock Investments
This tier consists of company stock investments that provide you with an opportunity to share in your Company’s financial success. And from your employer’s perspective, an investment in its stock creates a shared commitment.

However, a disproportionately large investment in any single stock puts your retirement savings at increased risk. In general, owning a fund that invests in just one stock is considered riskier than owning a diversified stock mutual fund, which is composed of stocks from dozens or even hundreds of companies. Even if a few of a diversified stock mutual fund’s holdings perform poorly, other stocks in the fund may do better, helping to offset the losses.

Consider owning a diversified mix of investments with no more than 20% of your retirement savings in company stock. When more than 20% of your retirement savings is invested in company stock, the risks of owning an individual stock may outweigh any potential benefits.

Open to new investments:

Closed to new investments:

A Note About Risk
Whenever you invest, there's a chance you could lose the money. U.S. Treasury investments and some U.S. government agency bonds are backed by the government, so it’s highly likely that payments will be made on time. But their prices can still fall when interest rates go up. Bond funds are made up of IOUs, primarily from companies or governments. These funds risk losing value if the debt isn’t repaid on time. Also, bond prices can drop when interest rates rise or the issuer’s reputation suffers. Small- and mid-cap funds are made up of the stocks of small and medium-sized companies. These companies have fewer financial resources than larger companies. Because of that, their stock prices can be more affected by swings in the economy. Non-U.S. stocks or bonds have risks tied to the political and economic stability of their country or region. And if the value of the foreign currency falls, the value of the stocks or bonds would also fall. In emerging markets (less developed countries), these risks may be even greater. The performance of a company stock fund depends on the price of a single stock, which can move up or down dramatically. So this type of fund can be riskier than a stock mutual fund, which may own hundreds or thousands of stocks. Diversifying means having different types of investments. It doesn’t guarantee you’ll make a profit or that you won’t lose money.

Vanguard Federal Money Market Fund:
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

As its name suggests, a stable value investment tries to keep its share price constant. But this is not guaranteed, and it's possible to lose money with an investment like this. Unlike bank savings accounts, this investment is not insured by the U.S. government. It's also not insured by your employer or Vanguard.

Vanguard Target Retirement Trusts Plus, Vanguard Institutional Total Bond Market Index Trust, Vanguard Institutional 500 Index Trust, and Vanguard Institutional Extended Market Index Trust are collective trusts, not mutual funds. This type of investment is offered only in retirement plans like yours. Before you invest, get the details. Know and carefully consider the objective, risks, charges, and expenses. Vanguard Fiduciary Trust Company manages the Vanguard collective trusts.

Collective trusts and separately managed accounts are special types of investments. They’re offered only in retirement plans like yours. Before you invest in one, know its objective, risks, charges, and expenses. Consider these things carefully.

Vanguard is a trademark of the Vanguard Group, Inc.

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