The Savings Plan offers the following core investment funds which invest some or all of their assets in bonds funds, in order from lowest to highest potential risk and return:

·         Stable Value Fund

·         U.S. Fixed Income Fund

·         Balanced Fund

The following provides more information about these core investment funds and their investment objectives.

Stable Value Fund

The Stable Value Fund is the most conservative core investment fund offered through the Savings Plan. It is designed to preserve your investment principal and earn a predictable rate of return. It comprises a wide range of fixed-income securities that mature, on average, in three to four years. The fund’s portfolio is diversified among U.S. government and federal agency securities, short-term bonds, and cash equivalents, and includes investment contracts issued by insurance companies and banks.

Historically, there is less risk associated with short-term investments such as the Stable Value Fund. However, because the fund’s objective is to protect your principal, there is also less opportunity for long-term growth. You may find this fund attractive if you are a conservative investor, you have a short-term horizon and are looking for security of principal, or you have a long-term horizon and would like to diversify a higher-risk portfolio. The performance of the Stable Value Fund is compared to the Merrill Lynch 1 – 3 Year Treasury Index.

U.S. Fixed Income Fund

By investing in high-quality bonds, the U.S. Fixed Income Fund is designed to provide a consistently higher level of income and potential for investment return than is available in the short-term market. The U.S. Fixed Income Fund invests in a wide range of fixed-income securities that mature, on average, in eight to ten years.

The U.S. Fixed Income Fund invests primarily in domestic fixed-income securities that have one of the three highest investment grade ratings—A or better—assigned by Moody’s Investor Services or Standard & Poor’s Corporation. Holdings also include U.S. government and federal agency securities, corporate bonds, mortgage-backed securities, and cash-equivalent instruments. The performance of the U.S. Fixed Income Fund is compared to that of the Citigroup (formerly Salomon Brothers Smith Barney) Broad Investment Grade Bond Index (“Citigroup BIG”).

Balanced Fund

The Balanced Fund is designed to provide investors with a diversified portfolio. The fund’s target asset allocation is 45% domestic stocks, 20% international stocks, and 35% fixed income (bonds and cash equivalents). The allocation may vary over time as the fund managers buy and sell securities (pursuant to the fund’s investment guidelines and objectives).

The goal of the Balanced Fund is to earn a higher rate of return than the bond market, but with less risk than investing only in stocks.

The fund’s risk and return potential will reflect a weighted average of the risk and return of the component allocations. At any time, the actual allocation percentages may differ from the targeted proportions; however, the fund is monitored to ensure that the allocation does not deviate beyond acceptable levels from the targeted allocation. If market conditions change significantly, the Savings Plan Investment Committee may change the targeted allocations. The performance of the Balanced Fund is compared to a custom benchmark composed of 45% Russell 3000®, 20% Morgan Stanley Capital International EAFE®, and 35% Lehman Brothers Aggregate Bond Index.