DCP has a total of 20 investment options you can choose from. Each of these investments falls into one of two main approaches: Build and Monitor or One-Step investing. Before we look at the differences between these two approaches, let’s look at a few standard investment principals.
As we mentioned before, past investment performance is no guarantee of future results. So why do we share past performance if it can’t predict future returns? Viewing past performance can provide you with insight into how a particular investment works and can help you determine what is “normal” behavior for an investment. To see current performance for each option, review the Investment performance section.
Let’s talk about risk. The growth of investments is always tied to some form of risk. Earnings do not always increase. Higher risk investments are designed to have the potential for higher earnings (faster growth), but they also have a greater potential for a loss of principal. Lower risk investments minimize risk, but this also comes at the cost of potential for faster growth. This is generally why younger investors will have higher risk investments where investors closer to retirement age select lower risk investments. The level of risk you choose is a personal decision.
So now we’ve seen that with investments there is always some form of risk and that past performance is no guarantee of future results. But how do you choose an investment? As we said before, DCP has two types of investment approaches: Build and Monitor or One-Step investing.
Build and Monitor or One-Step Investing — might be right for you, ask yourself these questions:
Your investments are automatically adjusted for you
The One-Step Investing approach is made up of 13 Retirement Strategy Funds, also called age-based or target date funds. Each one is diversified and automatically rebalances, adjusting your asset mix as you move toward a target date (the date you intend to begin making withdrawals) that meets your needs and lifestyle. With the One-Step Investing approach, your Retirement Strategy portfolio is already well diversified and will automatically adjust as you move closer to your target date.
You select, monitor and adjust your investments
With the Build and Monitor approach to investing, you can diversify by allocating your contributions among the available funds. To help achieve long-term retirement security, your portfolio should include investments in several different objective categories.
Spreading your assets among different types of investments might help you achieve a favorable rate of return, while minimizing your overall risk of losing money. Market or other economic conditions that can cause one category of assets, or one particular investment, to perform very well can often cause another asset category, or another particular security, to perform poorly.
Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk. For information on individual investing and diversification, visit the U.S. Department of Labor website.
Many investment professionals suggest putting your entire account balance and all future contributions into one strategy fund. If your target date should change, you can always transfer your money to a Retirement Strategy Fund that more closely matches your revised date. The Retirement Maturity Strategy Fund is allocated for investors who have been retired for 15 years or more.
While DRS and the DCP record keeper can provide you with information about investments, we cannot offer investment advice. If you are still not sure which investment approach may be right for you, talk with your financial advisor. To find out more about each fund, visit the investment sections (Retirement Strategy Funds or Build and monitor funds) and see each investment’s Fund Fact Sheet. These fact sheets are prepared by the fund managers and contain information about performance, asset mixes and the goals of the fund.
As with all investments, past performance is no guarantee of future results. So why do we share past performance if it can’t predict future returns? Viewing past performance can provide you with insight into how a particular investment works and can help you determine what is “normal” behavior for an investment.
|Investment option||3 month||1 year||3 year||5 year||10 year/ since inception|
|Retirement Maturity Strategy Fund||8.87%||4.95%||5.07%||4.65%||5.78%|
|2010 Retirement Strategy Fund||10.79%||4.54%||5.49%||5.31%||7.29%|
|2015 Retirement Strategy Fund||12.78%||3.96%||5.70%||5.70%||7.92%|
|2020 Retirement Strategy Fund||14.92%||3.36%||5.82%||5.94%||8.35%|
|2025 Retirement Strategy Fund||15.93%||2.70%||5.79%||6.06%||8.68%|
|2030 Retirement Strategy Fund||16.93%||1.86%||5.69%||6.12%||8.90%|
|2035 Retirement Strategy Fund||17.90%||0.90%||5.50%||6.09%||8.95%|
|2040 Retirement Strategy Fund||18.45%||0.76%||5.56%||6.16%||9.02%|
|2045 Retirement Strategy Fund||19.00%||0.76%||5.58%||6.20%||9.05%|
|2050 Retirement Strategy Fund||18.91%||0.71%||5.58%||6.21%||9.07%|
|2055 Retirement Strategy Fund||19.00%||0.82%||5.61%||6.23%||9.07%|
|2060 Retirement Strategy Fund||19.05%||0.79%||5.63%||6.25%||6.32%|
|2065 Retirement Strategy Fund||19.02%||N/A||N/A||N/A||-7.40%|
Build and Monitor Funds listed from lowest to highest risk
|Investment option||3 month||1 year||3 year||5 year||10 year/ since inception|
|Washington State Bond Fund||6.97%||7.70%||5.24%||4.57%||4.42%|
|Socially Responsible Balanced Fund||10.13%||4.33%||7.51%||7.92%||9.13%|
|US Large Cap Equity Index Fund||20.57%||7.57%||10.79%||10.77%||14.05%|
|Global Equity Index Fund||19.03%||-4.02%||1.32%||2.31%||3.99%|
|US Small Cap Value Equity Index Fund||18.95%||-17.27%||-4.13%||1.49%||7.94%|
|Emerging Market Equity Index Fund||19.03%||-4.02%||1.32%||2.31%||3.99%|
Online account: View the latest performance for all funds through your online account. This shows performance to the most recent month-end. Here you can also change investments quickly and easily (pretty convenient).
Quarterly statement: Includes performance for the funds you currently invest in. Access this online in your DCP documents or check out your paper statement if you’ve opted for mail.
Investment performance PDF: Updated monthly, this is a list of all funds and their performance out to 10 years
Investment performance is the return on an investment fund and is measured over a specific period. DRS uses investment tables to help you compare the performance of all available investments at one time.
Below each investment name, you will see an additional row that is labeled benchmark or index (indented slightly). While they have different labels, these benchmark or index rows serve the same purpose—to help you compare an investment’s performance to the expectations set for it.
DRS offers two ways for you to build your investment portfolio: Retirement Strategy Funds and Build and Monitor funds.
Build and Monitor funds: Available funds include a bond fund, a short-term investment fund, a socially responsible fund and a series of index funds. Index funds are based on publically traded funds. For example, the US Large Cap Equity Index Fund performance can be measured against the Standard and Poor 500 Index numbers because their investment mixes mirror each other.
Retirement Strategy Funds: Also called age-based or target date funds, the risk-level of these funds is adjusted as you approach retirement age (reduced as you age). Retirement Strategy Funds are easy to spot because they have a year attached to the name, such as 2030 or 2055. This fund performance is measured using benchmarks. Unlike index funds, which have corresponding market index performance, Retirement Strategy Funds can be made up of multiple index measurements depending on the proportions of fund-types invested. Each benchmark is unique to the fund it mirrors.
While benchmarks and indexes are as close a comparison as you can have to your actual investment, the measurement tools do not include any fees associated with the funds. However, fees are calculated into the investment performance numbers you receive. You cannot invest directly in a benchmark or index.
Now you may be wondering: What do people actually do with this information? Why is investment performance a helpful tool? Three reasons: Past, present and future.
Past: Past investment performance is no guarantee of future results. So why do we share past performance if it can’t predict future returns? Viewing past performance can provide you with insight into how a particular investment works and can help you determine what is “normal” behavior for an investment.
Present: How are your investments doing? Are they meeting their benchmark goals? How do they compare to other funds? Use the tables to look at how your funds perform over time.
Future: How close are you to retirement? Let’s talk about risk. The growth of investments is always tied to some form of risk. Earnings do not always increase. Higher risk investments are designed to have the potential for higher earnings (faster growth), but they also have a greater potential for a loss of principal. Lower risk investments minimize risk, but this also comes at the cost of potential for faster growth. This is generally why younger investors will have higher risk investments where investors closer to retirement age select lower risk investments. The level of risk you choose is a personal decision.
When gathering information to make a decision, don’t rely on performance alone. Be sure to consider investment fees when deciding whether to move your investments. Some investments have higher fees. In addition to fees, consider the risk level for the investment. In DRS performance and fee tables, investments are listed in order from lowest to highest risk. For specific information about a fund’s risk levels, view the fund fact sheet for that investment.
While DRS and the record keeper can provide you with information about investments, we cannot offer investment advice. If you are still not sure which investment approach might be right for you, talk with your financial advisor.
A Retirement Strategy Fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. The Retirement Strategy Funds are identified by a target retirement year, spaced in five-year increments. Use the tables below to find the fund that’s right for you.
Retirement Strategy Funds are valued daily. Daily valuation means the fund values are adjusted daily to reflect the most current investment performance. This valuation enables you to have ready access to your funds. You can manage your investments and receive statements and payments more quickly than the monthly-valued investments.
These Retirement Strategy Funds each link to a fact sheet with more information about the fund. This information is prepared by AllianceBernstein L.P.
Take the year you were born and add it to the age you expect to retire or withdraw your funds. The sum is your target date.
birth year + retirement age = target date
Example: 1993 + 65 = 2058
Pick the fund with the date closest to your target date. In the example here, the closest fund would be 2060.
|Retirement Strategy Funds|
|Your birth year||Your default fund|
|1942 or earlier||Retirement Maturity Strategy*|
|1998 or later||2065|
*The Retirement Maturity Strategy Fund is allocated for investors who have been retired for 15 years or more.
Defaulting into Retirement Strategy Funds
Some DCP enrollment methods automatically default you into the Retirement Strategy Fund closest to the year you turn age 65. These situations include automatic enrollment, using the DCP Quick Enrollment form or leaving the investment selection blank in the longer DCP enrollment form.
Asset allocation funds
Seeks to achieve the highest total return over time consistent with its asset mix.
Diversified asset allocation portfolios designed for people who want to leave ongoing investment decisions to an experienced portfolio management team. The Retirement Strategy Fund is designed to correspond with the date closest to your expected target date for retirement. When you are far from your target date for retirement, most of the assets are invested in globally diversified equity portfolios. As you get closer to the target date for retirement, and continuing for 15 years beyond your target date, the management team gradually adjusts your fund to a more conservative asset mix. That means fewer stocks and more bonds and short-term investments. These assets can help generate income and protect your savings in retirement. The principal value of the fund(s) is not guaranteed at any time, including at the time of the target date or withdrawal.
Investments include U.S. stocks (small to large companies), international stocks, global real estate and bonds.
These funds are provided by the Washington State Investment Board (WSIB) and managed by AllianceBernstein L.P.
This could be an appropriate retirement investment if you find you don’t have the desire, comfort level or time to select your own mix of funds, monitor them and make changes. Each Retirement Strategy Fund is a complete portfolio that automatically adjusts and rebalances as you move closer to your target date. Asset allocation and balanced investment options and models are subject to the risks of the underlying funds, which can be a mix of stocks/stock funds and bonds/bond funds.
Here is a brief summary of each fund along with a link to its corresponding fact sheet. Each fund has a fact sheet with detailed information about the fund. These fact sheets are prepared by the fund managers.
How do I move my account balance to another investment?
Let’s say you’d like to move your retirement date (select a new Retirement Strategy Fund), or you want to select another fund. You can quickly and easily transfer part or all of your DCP account balance from one fund to another. The easiest way to do this is through your online account. You can also contact the DCP record keeper at 888-327-5596 for assistance.
To safeguard customers against the effects of excessive trading, DRS has established trading restrictions that regulate how frequently you can change investments.
If you are transferring more than $1,000 out of a fund, you are required to wait 30 calendar days before transferring money back into that same fund. The 30-day window is based on the last time you made a transfer out of the fund. The restriction will not affect your regular contribution or the ability to leave state service and withdraw your money. Transfers of $1,000 or less are not impacted by the trading restrictions.
DRS periodically reviews trade data to identify excessive trading. If existing restrictions are not sufficiently addressing excessive trade practices, DRS might take additional action. DRS reserves the right to establish or revise restrictions to comply with federal or state regulations, or as circumstances indicate.
In addition to the trading restrictions described above, DRS will also comply with restrictions put in place by our fund managers.
Note: Excessive trading (also referred to as “market timing”) involves transferring significant amounts of money and/or making frequent trades between investment options. This practice requires more cash on hand to honor the frequent trades and transfers. Because the excess cash is used to cover potential transfers instead of being invested, long-term returns can be lowered for other participants. Excessive trading can also increase fund management costs.
|DCP Funds||Manager fee||Manager administrative fee||WSIB fee||Recordkeeping fee||DRS fee||Total|
|Retirement Maturity Strategy Fund||0.1417%||0.0000%||0.0226%||0.0625%||0.0473%||0.2741%|
|2010 Retirement Strategy Fund||0.1372%||0.0000%||0.0226%||0.0625%||0.0473%||0.2696%|
|2015 Retirement Strategy Fund||0.1347%||0.0000%||0.0226%||0.0625%||0.0473%||0.2671%|
|2020 Retirement Strategy Fund||0.1348%||0.0000%||0.0226%||0.0625%||0.0473%||0.2672%|
|2025 Retirement Strategy Fund||0.1450%||0.0000%||0.0226%||0.0625%||0.0473%||0.2774%|
|2030 Retirement Strategy Fund||0.1527%||0.0000%||0.0226%||0.0625%||0.0473%||0.2851%|
|2035 Retirement Strategy Fund||0.1572%||0.0000%||0.0226%||0.0625%||0.0473%||0.2896%|
|2040 Retirement Strategy Fund||0.1512%||0.0000%||0.0226%||0.0625%||0.0473%||0.2836%|
|2045 Retirement Strategy Fund||0.1413%||0.0000%||0.0226%||0.0625%||0.0473%||0.2737%|
|2050 Retirement Strategy Fund||0.1413%||0.0000%||0.0226%||0.0625%||0.0473%||0.2737%|
|2055 Retirement Strategy Fund||0.1413%||0.0000%||0.0226%||0.0625%||0.0473%||0.2737%|
|2060 Retirement Strategy Fund||0.1413%||0.0000%||0.0226%||0.0625%||0.0473%||0.2737%|
|2065 Retirement Strategy Fund||0.1383%||0.0000%||0.0226%||0.0625%||0.0473%||0.2707%|
|DCP Funds||Manager fee||Manager administrative fee||WSIB fee||Recordkeeping fee||DRS fee||Total|
|Savings Pool Fund||0.0000%||0.0018%||0.0226%||0.0625%||0.0473%||0.1342%|
|Washington State Bond Fund||0.0000%||0.0087%||0.0226%||0.0625%||0.0473%||0.1411%|
|Socially Responsible Balanced Fund||0.3200%||0.0200%||0.0226%||0.0625%||0.0473%||0.4724%|
|U.S. Large Cap Equity Index Fund||0.0000%||0.0030%||0.0226%||0.0625%||0.0473%||0.1354%|
|Global Equity Index Fund||0.0400%||0.0156%||0.0226%||0.0625%||0.0473%||0.1880%|
|U.S. Small Cap Value Equity Index Fund||0.0100%||0.0125%||0.0226%||0.0625%||0.0473%||0.1549%|
|Emerging Market Equity Index Fund||0.1000%||0.0200%||0.0226%||0.0625%||0.0473%||0.2524%|
All investments include costs which take the form of fees. At just a fraction of a percent, most investment fees seem pretty insignificant and many of us ignore them. But knowing the true cost of your investments is a critical part of retirement savings. Let’s take a closer look at investment costs. DCP has two different types of costs: Administrative and management.
Administrative costs: These cover investment services provided by the Washington State Investment Board (WSIB), recordkeeping, communications and customer service. For DCP these fees are listed on your quarterly statement under “Expenses.” Administrative costs apply to all customers, are based on the administrative costs of the program and are determined annually. Changes, if any, usually go into effect in July.
Because DRS only recovers the cost of administering DCP, we keep the fees low. The DCP administrative costs include WSIB, recordkeeping and the DRS administrative cost. The administrative fee for DCP is 0.1324%, which is very low for voluntary retirement savings. For this reason, many DCP participants choose to have savings plans from other employers rolled into their DCP savings-to consolidate and simplify retirement funds and to save costs. To see if this option is right for you, be sure to consider any potential costs and investment limitations.
Management costs: These make up the bulk of fund expenses. Why? The funds are managed by teams of investment professionals. The costs vary with each investment option. Management costs are included in the price of shares and won’t be visible on your statement. See the DCP fees table to view actual management fees for each fund.
This example is simplified because normally your investments would vary each quarter depending on your contributions and the performance of the market. So every quarter would be calculated based on the exact account balance and performance at the time.
The fee total varies by fund. For this example, let’s use the 2035 Retirement Strategy Fund for DCP. The total cost for this fund is included in the last column of the fee tables above. This fund has a total fee of 0.2896% per year.
The formula to estimate your fund cost is: Account balance x Total fee = Annual cost in dollars
2035 Fund annual fee: $10,000 x 0.002896 = $28.96
The total annual fees for the $10,000 balance would be $28.96
Financial Literacy and Education Commission
888-MyMoney - mymoney.gov
MyMoney.gov is an online point of access to financial information from the 21 federal agencies, departments and bureaus that make up the Financial Literacy & Education Commission. Find information about how to plan for a host of life events that have financial implications, such as birth or adoption of a child, home ownership or retirement.
U.S. Securities and Exchange Commission (SEC)
888-SEC-6585 - sec.gov
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation.
Washington State Department of Financial Institutions (DFI)
877-746-4334 - TTY: 360-664-8126 - dfi.wa.gov
DFI provides regulatory oversight for our state's financial service providers.
Washington State Investment Board (WSIB)
360-956-4600 - sib.wa.gov
WSIB closely monitors the performance of all DCP investment options. Safeguarding and maximizing your retirement dollars is one of the investment board's highest priorities. Trustees of the WSIB have fiduciary responsibility to act only for the benefit of the participants.