Page 51 - MayDefComp

Important Changes to Your 457 Deferred Compensation and 401(a) Retirement Plans

The 457 Deferred Compensation and 401(a) Retirement Plans are an important part of many employee’s long-term financial strategy.
That is why the County of San Mateo regularly reviews and sometimes updates the plan’s investment options so you may continue to
select from a competitive range of investment choices.

As a result of a recent review, we are announcing the following plan changes effective April 16, 2021:

• Share Class changes to the Vanguard Target Date Retirement Funds. The County of San Mateo is taking the
opportunity to move to a lower cost share class.
• Expanding the Target Date offering by including funds with expected retirement dates in five-year increments.

Funds offer investors different types of shares, known as classes. Although each class will invest in the same investment portfolio of
securities and have the same investment objectives and policies, each class may have different fees and expenses and, therefore,
different performance.

The County of San Mateo is taking the opportunity of moving to a lower cost share class and expand its target date offering. The most
significant benefit of increasing the frequency of the target date funds from 10 years to 5 years is that you will be able to select from a
target date fund that is designed to more closely match your year of birth and thus your expected year of retirement. This is achieved
because the date in the name of the target date fund is the assumed date of retirement.

Why Target Date Funds?
Target Date Funds offer a complete investment strategy in a single option. Each has a date in its name corresponding to when you
expect to retire (or plan to start withdrawing your money). The fund asset mix changes over time based on that year, investing more
conservatively. This means you do not have to constantly monitor your account and make changes to your investment mix as you get
closer to retirement. Each fund does this for you, automatically. Therefore, only one target date fund is generally necessary.

Target Date Fund investment objectives:

Vanguard Institutional Target Retirement Income Fund
The fund seeks to provide current income and some capital appreciation. The fund invests in other Vanguard mutual funds
according to an asset allocation strategy designed for investors currently in retirement. Its indirect bond holdings are a diversified
mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; inflation-
protected public obligations issued by the U.S. Treasury; mortgage-backed and asset-backed securities; and government, agency,
corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar.
Vanguard Institutional Target Retire Funds 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060, 2065
The funds seek to provide capital appreciation and current income consistent with its current asset allocation. The funds invest in
other Vanguard mutual funds according to an asset allocation strategy designed for investors planning to retire and leave the
workforce in or within the target year. The funds’ asset allocation will become more conservative over time, meaning that the
percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income
investments will increase.