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.

Investments in Target Retirement Trusts are subject to the risks of their underlying funds. The year in the trust name refers to the approximate year (the target date) when an investor in the trust would retire and leave the workforce. The trust will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Trust is not guaranteed at any time, including on or after the target date. Keep in mind that diversification does not ensure a profit or protect against a loss.

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 0.10%, while the industry average mutual fund expense ratio is 0.58%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2018.

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
All investing is subject to risk, including the possible loss of the money you invest. While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. Although the market values of government securities are not guaranteed and may fluctuate, these securities are guaranteed as to the timely payment of principal and interest. Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks. Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets. Because company stock funds concentrate on a single stock, they are considered riskier than diversified stock funds.

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.

A stable value investment is neither insured nor guaranteed by the U.S. government. There is no assurance that the investment will be able to maintain a stable net asset value, and it is possible to lose money in such an investment.

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 not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc.

Collective trusts and separately managed accounts (SMAs) are not mutual funds. These investments are available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing.

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