SAVINGS. FUTURE ROAST 401(k) SAVINGS PLAN. Future Roast Enrollment Guide

Transcription

1 FUTURE ROAST 401(k) SAVINGS PLAN Future Roast Enrollment Guide SAVINGS p a r t n e r s i n b u i l d i n g y o u r d r e a m s LEARN why saving now matters DISCOVER Future Roast s great features FIND OUT how to enroll

2 DIVERSITY Our second guiding principle, to embrace diversity as an essential component in the way we do business, is an important element of our savings program. The provisions within Future Roast 401(k) Savings Plan and administrative services support the choices an eligible partner makes based on individual needs, personal preferences and financial goals. How the Savings Program Supports Diversity When it comes to investment styles and savings goals, no two people are exactly alike. That is why Future Roast offers two distinct investment approaches. One is automatic, offering pre-mixed investments targeting four different levels of risk and potential return. The other is manual, allowing partners to design their own investment mix from Future Roast s individual investment funds. Within each investment approach, Future Roast offers a variety of investment choices in which partners may choose to invest, including a fund managed by a minority-owned firm. Partners can structure their investment elections based on individual financial goals, tolerance for investment risk and short- and long-term needs. Future Roast includes a socially responsible investment fund for partners choosing to invest in companies that produce goods and services that support our communities and our environment. Partners have flexibility to access their Future Roast account through loans and withdrawals for individual financial needs, from purchasing a home to meeting health care needs to planning for retirement.

3 You have dreams. Big plans for the future. HELP GET THERE with Future Roast.

4 INTRODUCTION Find out how to make your money work for you how to make it grow. Saving through Future Roast may be one of the smartest moves you can make. Why? YOU SAVE MONEY AUTOMATICALLY USING PAYROLL DEDUCTION. It is easy and convenient. STARBUCKS ADDS MONEY TO YOUR ACCOUNT. In general, when you save through Future Roast, and you are still employed at year end, Starbucks will put money in your account, too. The longer you work at Starbucks, the larger the amount Starbucks contributes. IT IS ALL YOURS. You can borrow from your account while working at Starbucks. Or you can take it all with you when you leave your savings, the amount Starbucks adds and any earnings you make from investing the money in your account. Play to learn. Have fun. Go to and discover why saving through Future Roast may be one of the smartest moves you can make. This enrollment guide provides an overview of the savings benefits currently offered to Starbucks U.S. partners and partners of participating affiliated companies. Starbucks presently intends to maintain this benefit plan without change. However, Starbucks reserves the right to change, modify or terminate these benefits at any time, with or without notice. This guide is not a promise or guarantee of benefits. Nothing herein should be construed as creating contractual rights or obligations or restrict in any way the rights of Starbucks and its subsidiaries and affiliates. Every effort has been made to ensure the accuracy of the information contained in this guide. Nonetheless, if there is any discrepancy between the information set out here and the legal plan and trust documents, the legal plan and trust documents always govern. For additional information, you should also review the Future Roast Plan Description. Information was provided by Starbucks. Fidelity Investments is not responsible for its content. 2 partners in building your dreams

5 WHAT IS INSIDE SAVING Savings 101 Page 6 Start with the Basics Page 6 What is a 401(k) plan? Page 6 What is a rollover? Page 6 What is a before-tax contribution? Page 6 What is a matching contribution? Page 6 What are investment returns? Page 6 What are investment earnings? Page 7 What is a trust? Page 7 Save Now Page 7 Compounding: Why Saving Now Matters Page 7 Put Your Contributions and Starbucks Matching Contributions to Work Page 8 Decide How Much to Contribute Page 8 Add Starbucks Matching Contribution Page 8 Save as Much as You Can Page 9 Pay Less in Taxes Page 10 Do Not Miss Out on the Before-Tax Advantage Page 10 Can You Take a Tax Credit? Page 11 INVESTING Investing 101 Page 13 Be a Smart Investor Page 13 Spread it out: Diversify Page 13 The inflation factor Page 13 Stick to your investment strategy Page 13 Keep your cool Page 13 partners in building your dreams 3

6 Figuring It Out Page 14 Decide Your Timeframe and Goals Page 14 Determine Your Risk Tolerance Page 15 Decide on Your Investment Style Page 17 Your Investment Options At a Glance Page 18 ENROLLING Take Charge Now Page 20 When You Are Eligible Page 20 How to Enroll Page 20 Transfer an Account Balance from Another Plan Page 21 Choose a Beneficiary Page 21 Change When You Need To Page 22 Keep Track of Your Account Page 22 Managing Your Account Page 22 ACCESSING Access Your Money if You Need It Page 24 Borrow from Your Account Page 24 In-Service Withdrawals Page 25 Hardship withdrawals Page 25 Age-59½ withdrawals Page 25 Rollover withdrawals Page 25 Your Choices When You Leave Page 26 RESOURCES Your Resources Page 28 Government Resources Page 28 Additional Investment and Retirement Planning Resources Page 28 4 partners in building your dreams

7 SAVING WANT THE MOST? Start saving now.

8 SAVING SAVINGS 101 Here is a quick overview on saving with a 401(k) plan. You will learn more as you move through this guide. Already know the advantages of a 401(k) and want to enroll? Skip ahead to Enrolling on page 20 for instructions. Start with the Basics What is a 401(k) plan? It is a type of savings plan that gives you a tax break. The term 401(k) comes from the Internal Revenue Code section that allows you to put off paying taxes on: The amount you save in your account The amount Starbucks adds to your account Any investment earnings on the money in your account Why Save in a 401(k) Plan? Reason# : You receive money from the company. Starbucks matches your contributions up to the first 4% of eligible pay you contribute. And the longer you are with Starbucks, the larger the match you receive. You do not have to pay taxes until you withdraw the money, usually when you leave the company or retire. Even then, you can continue to postpone paying income taxes on your account if you decide to roll the money over to another eligible retirement plan such as another employer s 401(k) plan or to an individual retirement account (IRA). Because of this tax advantage, you may decide that a 401(k) plan is a better way to save than a regular savings account. What is a rollover? You may be able to roll over or transfer money into Future Roast from your former employer s eligible plan or from an IRA that holds money from a former employer s eligible retirement plan. Also, when you leave Starbucks, you may be able to roll over your Future Roast account to another eligible plan or IRA. What is a before-tax contribution? This is the money you put into Future Roast that you normally would have received as taxable pay. Because you postpone paying taxes on these amounts until a later date, they are called before-tax contributions. What is a matching contribution? This is the money Starbucks adds to your account based on your before-tax contributions, provided you are still working at calendar year end (certain exceptions may apply). Because Starbucks matches a certain percent of your contributions, it is called a matching contribution. Some companies do not make a match, but Starbucks wants to help you save and reward your role in our success. The amount of the matching contribution increases the longer you stay with Starbucks. What are investment returns? When you join Future Roast, you decide how to invest your contributions among the available investment choices. The investment funds may gain or lose value. That gain or loss of value is referred to as your investment return. Returns are usually expressed in percentages (for example, 7.5%). 6 partners in building your dreams

9 SAVING What are investment earnings? Investments may gain or lose value. Gains are sometimes called earnings. What is a trust? The money in your 401(k) account is protected by a trust arrangement, which means Starbucks cannot use any of the money in Future Roast for any reason. The trust also protects the money from both Starbucks creditors and your creditors. However, your money is still subject to the gains and losses that result from the performance of the investment options you choose. SAVE NOW What are your plans? Need money for school, a car or maybe the down payment on a house? Want to save for a comfortable lifestyle in the future? Tax advantages, your contributions, Starbucks matching contributions and any earnings on your account all add up to a terrific opportunity to realize your dreams. Saving money through Future Roast is a smart move. Saving money now is even smarter. What s Your Excuse? I m too young to start saving. You should think about saving now. If you do not start now and put time to work for you, you may miss out on potential earnings. It is all about compounding. Read about it below. Compounding: Why Saving Now Matters Compounding means giving your investments time to make earnings on prior earnings, and so on and so on over time, your earnings may work for you in a big way. The cost of delaying saving The example below shows what a hypothetical partner might gain five, 10, 15 or 20 years from now if he/she starts saving today, instead of waiting 10 years. The example below assumes saving $100 a month and earning an 8% investment return compounded monthly. Compounding really makes a difference! And these figures do not even include Starbucks matching contribution. Read about that next. partners in building your dreams 7

10 SAVING PUT YOUR CONTRIBUTIONS AND STARBUCKS MATCHING CONTRIBUTIONS TO WORK Decide How Much to Contribute Generally, you can contribute from 1% to 75% of your eligible pay each pay period, up to the current IRS annual calendar limit ($15,000 for 2006) or certain Future Roast limits. You will be advised if a specific Future Roast limit applies to you. As of April 1, 2006, if you are age 50 or older anytime during the year, you are eligible to make additional catch-up contributions. The IRS limit on catch-up contributions is $5,000 for See your Future Roast Plan Description for more information regarding these contributions. Your contributions are automatically deducted from your eligible pay. Once you enroll, your contributions usually start within two paychecks. You can change your contribution rate to meet your financial needs. You can start, stop, reduce or increase your contribution rate each pay period. Add Starbucks Matching Contribution Starbucks matches up to the first 4% of pay you contribute from each paycheck. Your matching contribution will be deposited to your account after the end of each calendar year, provided you make regular 401(k) contributions and are employed on December 31. The exceptions to this requirement are: 1. You retire from Starbucks on or after age 65, 2. You become disabled, or 3. You die during the year. The match amount depends on your length of service since your most recent date of hire, and effective April 1, 2006, the match rates are: LENGTH OF SERVICE FROM MOST RECENT DATE OF HIRE STARBUCKS MATCHING CONTRIBUTION Less than 24 months 25% 24 months to less than 60 months 50% 60 months to less than 96 months 75% 96 months to less than 120 months 100% 120 months or more 150% Why Save in a 401(k) Plan? Reason# : The money is yours. You can take it with you if you leave. In other words, you immediately own all of the money in your account including Starbucks matching contributions. 8 partners in building your dreams

11 SAVING The longer you work at Starbucks, the larger Starbucks match is on your contributions. What can this mean in actual dollars? Take a look at the example below. LENGTH OF SERVICE FROM MOST RECENT DATE OF HIRE IF YOUR CONTRIBUTION OF 4% OF PAY EQUALED... STARBUCKS MATCHING CONTRIBUTION WOULD BE... Less than 24 months $17 $ months to less than 60 months $17 $ months to less than 96 months $17 $ months to less than 120 months $17 $ months or more $17 $25.50 You are 100% vested in meaning that you own your contributions and Starbucks matching contributions. Any investment earnings on the contributions in your account are also yours to keep. When you enroll, you choose how to invest your contributions in one of the four blended investment options or among the individual investment funds. Your Starbucks matching contributions are automatically invested the same way. Learn more about your investment choices in the Investing section of this guide, beginning on page 13. Save as Much as You Can Try to save at least 4% of your pay, so you can benefit from the full Starbucks matching contribution. You can think of Starbucks match as additional pay that is set aside and put into your account at year end. Even if you cannot save a lot now, start small and build over time. What s Your Excuse? I don t make enough money to save. Even if you are just starting out, try to save at least $.20 an hour. For a 25-hour work week, that would be $5 a week. After a year of saving, you would have $260. And do not forget Starbucks matching contribution. Plus, you save taxes and may even be eligible for a federal tax credit. Go to the Future Roast interactive site at and play the different games to explore what your savings might be like over time using different contribution rates. You will also discover how much Starbucks match can add and why an earlier start on saving is so important. partners in building your dreams 9

12 SAVING PAY LESS IN TAXES Do Not Miss Out on the Before-Tax Advantage Take a look at the tax savings in the example below. This example shows why Future Roast is a better way to save than a regular savings account. BIWEEKLY PAY: $1,000 CONTRIBUTION: 6% OR $60 PER PAYCHECK FUTURE ROAST REGULAR SAVINGS ACCOUNT Before-tax biweekly pay $1,000 $1,000 Less: Before-tax contributions to Future Roast (6%) ($60) $0 Income you are taxed on $940 $1,000 Subtract your federal taxes* ($141) ($150) Take-home pay $799 $850 Money you invest in a regular savings account $0 ($60) Amount you have left to spend $799 $790 * Based on a 15% tax bracket Bottom line: $60 saved before taxes reduces your take-home pay by only $51 and you end up with more to spend now. That is a smart way to save! Remember, you do not pay taxes on any investment earnings in your Future Roast account until it is paid to you, like you would for a regular savings account. And with Future Roast, you get Starbucks match if you are employed at year end you cannot beat that. Look at the effect of the Starbucks matching contribution! In the above example, assume you have worked more than two years and are eligible for a 50% match. A $51 reduction in take-home pay will result in a total of $80 savings to your Future Roast account. And you are immediately 100% vested in your matching account. That is like receiving a 33% return on your contributions for the year. Here is an example of how this works: BIWEEKLY PAY: $1,000 CONTRIBUTION: 6% OR $60 PER PAYCHECK FUTURE ROAST REGULAR SAVINGS ACCOUNT Reduction in take-home pay $51 $60 Balance in account after one pay period $60 $60 Matching contribution credited after the first of the year (50% on the first 4% of pay for this example) $20 $0 TOTAL $80 $60 10 partners in building your dreams

13 SAVING Can You Take a Tax Credit? In addition to the before-tax advantage of saving through Future Roast, you may be able to take a federal tax credit of up to $1,000 on the first $2,000 you contribute to Future Roast each year. This credit applies only to certain income levels, and other limits apply. But it is worth checking out. If you qualify for a tax credit, you subtract that amount directly from any taxes you owe when you file your federal income tax. If you are single and have an adjusted gross income of less than $25,000 or are married and have an adjusted gross income of less than $50,000 a year, find out more about the tax credit on the Future Roast site at or review the tax credit information in your Future Roast Plan Description. Why Save in a 401(k) Plan? Reason# : You save automatically. Through payroll deduction, your savings are automatically taken out of your paycheck so you do not have to remember to save and you are less tempted to spend. Why Save in a 401(k) Plan? Reason# : Go for the tax break. You do not pay federal taxes, and most state income taxes, on the money you put into Future Roast until it is paid directly to you. That means less of your pay is taxed when you make a contribution. partners in building your dreams 11

14 INVESTING Your money does not just sit there. YOU CHOOSE how to invest it in any of the investment options available through Future Roast.

15 INVESTING INVESTING 101 When you join Future Roast, not only do you decide how much to save, you also decide how you want your money invested. That means putting money in an investment option with the goal of growing your investment over time. Here is a quick study in investment basics. Just keep these tips in mind when you decide how to invest your savings. For more information on available investment options, please refer to the enclosed document, Investment Options and Frequent Trading Notice. You may also contact Fidelity at (866) or go online at Be a Smart Investor Why Save in a 401(k) Plan? Reason# : Your money can grow. When you save in Future Roast, your money can grow over time. It is not just sitting there. Spread it out: Diversify Do not put all your eggs in one basket. Experts recommend that you spread your money across several of the different investment types. This is called diversification. With diversification, if one investment fund does not do well, the performance of the remaining investment funds may make up the difference. Future Roast offers several individual funds with a range of investment risk from low risk to high risk so you can choose the mix of investments that works for you. Or, you can select one of the four blended investments that are pre-mixed from the individual investment funds, based on a specific level of risk. In the blended investment options, diversification is done automatically for you. The inflation factor Even if you consider yourself a fairly conservative investor, preferring low-risk investments, you will still want to earn enough to outpace inflation. For example, if you invest all of your contributions in a safe, conservative fund that earns 2% annually and inflation is 3%, inflation will erode away your investment earnings. Stick to your investment strategy Your investment strategy is simply the decision you make regarding where to invest your Future Roast savings. For example, your investment strategy may be to invest 50% in Fund A, 25% in Fund B and 25% in Fund C. Once you start saving, you will want to check your balances in each investment at least once a year. Depending on each investment s return, you may find you need to move some of your money between investments to get back on track with your investment strategy. Keep in mind that this account management is done automatically for you if you select one of the blended investment options. Keep your cool Your investment returns may go up (creating earnings) and down (creating losses) over time. Do not panic. Stocks go up and down in value, making them riskier investments. But historically, despite market cycles, they have outperformed other types of investments. If you are saving over a longer period of time, your investment strategy should help ride out the down times. If you are saving over a short period of time, your investment strategy should include less risky investments. partners in building your dreams 13

16 INVESTING FIGURING IT OUT So what should your investment strategy be? It is all about your goals and your tolerance for risk. It is about your investment style. Before you can determine your investment strategy where you want to invest your savings you need to understand: 1. Your timeframe and goals. What are you saving for? When will you need the money? Are you investing for a short-term or long-term goal? Not sure what your timeframe and goals are? Take the quiz below. 2. Your tolerance for market risk. How much risk are you willing to take? Are you comfortable with taking more risk for the chance of a higher investment return? Or are you more comfortable playing it safe with lower-risk investments? Not sure? Take the quiz on page 15 to find out. 3. Your investment style. Are you very hands-on with your investments, or do you want a more automatic approach? Not sure? Take the quiz on page How to select your investments. Which investments meet your needs? Choose one or a combination of the available individual funds described on the insert Investment Options and Frequent Trading Notice. For additional information, review page 18, refer to the investment resources at the end of this enrollment guide or contact your personal financial advisor. Decide Your Timeframe and Goals Complete the quiz below and on the next page. Then check the timeframe and risk tolerance on page 16 that best describes you. Determine How Fast You Need Your Money Take this quiz to discover what your investment timeframe is. 1. Your last year of work is: A. Right around the corner B. About a million years from now 2. I want to save for: A. A new toy (boat, car, etc.) or to travel the world B. A comfortable life when I stop working 3. I want to dip into my savings in: A. Less than five years B. 15 or more years 4. I plan on staying with Starbucks for at least: A. Three years B. 10 or more years Review your answers and see where you fit in. If you answered mostly A s, you are considered a short-term investor. You may want your money soon or be close to retirement. Think about choosing investments that are considered low-risk, so your money will be there when you need it. If you answered mostly B s, you are considered a long-term investor. You have plenty of time before you need your money. Think about investing in higher-risk funds that have the potential to pay bigger earnings over the long term. Of course, the longer you save, the more you can earn especially with compounding on your side. Just flip back to the chart on page 7 to appreciate the difference time can make. This quiz does not endorse a specific method of investment. It is simply a fun way to gain insight into what may be your personal investment style. 14 partners in building your dreams

17 INVESTING Determine Your Risk Tolerance Complete the quiz below. Then check the timeframe and risk tolerance on page 16 that best describes you. Evaluate How Comfortable You Are with Risk Take this quiz to find out if you are comfortable taking some risk with your money or not! 1. How would your best friend describe you? A. A play-it-safe kind of person B. Willing to take some chances C. A daredevil 2. The riskiest thing you have ever done is: A. Jaywalked B. Ridden a roller coaster C. Bungee-jumped 3. If the value of your investments dropped 30% in one year, you would: A. Freak out B. Be a little concerned C. Barely bat an eyelash 4. When you got your allowance as a kid, you: A. Socked it away in your piggy bank B. Used it to finance your lemonade stand to turn a profi t C. Played poker with other kids to double your money 5. When you have a major fi nancial decision to make, you: A. Agonize for hours about what to do B. Call all of your friends for advice C. Do some research, but ultimately go with your instincts This quiz does not endorse a specific method of investment. It is simply a fun way to gain insight into what may be your personal investment style. 6. You would feel comfortable risking x% of your money if the chance of doubling it was x%. A. 10% and 10% B. 25% and 25% C. 50% and 50% 7. How much emergency cash do you have put away? A. Not much, and you feel the need to play it safe with your investments now B. Some, so you can take some chances C. Plenty, so you can handle the gamble that comes with higher-risk investments Review your answers and see how things stack up. If you answered mostly A s, you are considered a lower-risk investor. You are not very comfortable with taking chances, so think about sticking to more conservative, low-risk investments. If you answered mostly B s, you are considered a medium-risk investor. You are willing to take some risks to beef up your investment portfolio. You may want to consider investing in a combination of low- to medium-risk funds, depending on your savings timeframe and goals. If you answered mostly C s, you are considered a higher-risk investor. You are pretty comfortable with taking a gamble. Think about choosing mediumto aggressive-type funds whose main goal is long-term growth. partners in building your dreams 15

18 INVESTING 16 Investment timeframe: Short-term Long-term partners in building your dreams Risk tolerance: Now see which investment strategy might work best for you. Low risk Medium risk High risk Short-term, low risk You need to access your money soon and you do not like to take many chances. Your main goal now is to make sure that your money will be there when you need it. Concentrate on low-risk funds to help you safeguard your contributions. And remember, even though you may be investing mostly in a conservative fund, your account will still grow in value if you factor in the company match. Short-term, medium risk Though you need your money soon, you would like to see opportunity for more earnings than very conservative investment returns will provide. You are willing to take some risk, as long as your portfolio stays fairly stable. You realize you could lose money if the stock market loses value. So while you may invest in stocks, you will still be investing more in low-risk funds. Short-term, high risk You are comfortable with taking risks, but you will need your money soon. So you may not have time to recover if the stock market hits a downswing and loses value. Because of your short investment timeframe, look at placing your money in a combination of low, medium and somewhat high-risk funds. Long-term, low risk You have some time before you need your money and you like to play it safe. Stable value and fixed income funds may seem right to you. But remember, your investments will need to earn enough to outpace inflation. Because you have time to recover if stocks perform poorly, think about placing some of your money in higher-risk funds for long-term growth. Long-term, medium risk Time is on your side and you want solid growth. You want to position yourself to benefit from gains when the stock market goes up in value, but you do not want to worry when the market takes a downswing. You are willing to invest in higher-risk funds, but you also want to achieve some balance with medium-risk investments. Long-term, high risk You will not need your savings for a while and you are comfortable with taking chances. You know that the bigger the risk, the bigger the potential payoff. Look at higher-risk funds to achieve the best earnings potential on your investments. But remember to spread your savings out among different investments to reduce risk. Sample Investment Strategies

19 INVESTING Decide on Your Investment Style You may be an investor who likes to research funds and track performance. Or you may be an investor who would rather leave the research and account management in someone else s capable hands. That is why Future Roast offers two distinct investment approaches: Manual You create your own investment mix from the available individual funds. Automatic You choose one of four blended investment options based on your desired level of risk and potential return (Conservative, Moderate, Growth and Aggressive). Rather than selecting a mix of individual investments, you select one blend option that most closely matches your risk tolerance and time horizon (investment approach). If you elect to invest in the blended investment options, it is recommended that you select just one of these options the one that matches your level of risk tolerance. Each blended investment contains a diversified mix of the individual investments and is automatically rebalanced to maintain the targeted risk. Find the Right Investment Approach Trying to decide which investment approach manual or automatic is right for you? For each set of statements below, circle the one that best describes your attitude toward investing. A. I feel like I know a lot about the investment markets. B. I feel like I have a lot to learn about the investment markets. A. I want the flexibility to create my own personal mix by investing in a variety of Future Roast s individual investments. B. I like the idea of having a preset investment mix that is automatically diversified for me. A. I like to have a high degree of control over my 401(k) investments. B. I prefer a professionally managed investment mix. A. I am comfortable with monitoring my investment mix and rebalancing it periodically. B. I would rather leave my investments alone and have my account rebalanced for me, unless my personal situation or risk tolerance changes. A. I enjoy researching funds and keeping up with the investment markets. B. I would rather not spend time researching funds and staying on top of the investment market. If you answered mostly A s, you may prefer to create your own investment mix with Future Roast s individual funds. See page 18 and the Investment Option and Frequent Trading Notice insert provided. If you answered mostly B s, investing in one of Future Roast s blended investments may be the right approach for you. See page 18 and the Investment Option and Frequent Trading Notice insert provided. This quiz does not endorse a specific method of investment. It is simply a fun way to gain insight into what may be your personal investment style. partners in building your dreams 17

20 INVESTING Your Investment Options... At a Glance Here is a quick look at the individual and blended investment options, shown in order of increasing potential for risk and return. You can find more information about these investment options in the Investment Option and Frequent Trading Notice insert provided or by logging onto Fidelity NetBenefits at com and accessing the Investments section. TYPE OF INVESTMENT (ASSET CLASS) FUTURE ROAST INVESTMENT CATEGORY CATEGORY OBJECTIVE (RISK AND RETURN) Investment Options Stable Value Stable Value Low-risk investment with low earnings potential Seeks to preserve the value of contributions and to earn income relative to current interest rates. Historically, long-term earnings have been lower than the long-term earnings on stock investments. Fixed Income Bond Low- to medium-risk investment with low earnings potential Seeks long-term preservation of contributions and a stable rate of return. Historically, long-term earnings have been lower than the long-term earnings on stock investments. Specialty/Sector Domestic Equities Large Growth Socially Responsible Equity (Stocks) Domestic Equities Large Value Domestic Equities Large Blend (Core) Domestic Equities Large Growth Domestic Equities Small Value Domestic Equities Small Growth International Global Blended Investment Options Balanced Conservative Moderate Growth Aggressive Medium- to high-risk investment with higher earnings potential Seeks to grow your money over time. Invests in companies that have been screened for certain criteria including environmental policies, workplace issues and other topics. Screening criteria may impact the potential for investment earnings when compared to other similar stock investments. Medium- to high-risk investment with higher earnings potential Seeks to grow your money over time. Value can rise and fall drastically with changes in stock market conditions. Historically, over time long-term earnings have been higher than the long-term earnings on money market, stable value and fixed income investments. Low- to high-risk investment Each blended investment option contains a diversified mix of the individual investment options described above and each offers a different level of risk and potential return. 18 partners in building your dreams

21 ENROLLING Start saving for your dreams. GO ONLINE OR CALL. That is all it takes.

22 ENROLLING TAKE CHARGE NOW Here is how to start saving in Future Roast. It is easy. When You Are Eligible Generally, you can join Future Roast if you: Are on the U.S. payroll, Are age 18 or older, and Have completed 90 days of service. Special rules may apply if you leave Starbucks and are rehired. See your Future Roast Plan Description for the details on eligibility. How to Enroll Once you are eligible, you can enroll by: Visiting the Future Roast interactive site at (select Enrolling and then the Enroll Now option and you will be taken to the Fidelity website), Logging on to Fidelity NetBenefits at or Calling Fidelity at (866) What s Your Excuse? I can wait. I ll win the lotto. The odds against winning the lotto are astronomical. You are more likely to be struck by lightning (a 1 in 30,000 chance) than win the lottery! However, getting the company match is a sure thing, once you enroll in Future Roast and are also employed with Starbucks on December 31. Online Enrollment Fidelity Available virtually 24 hours a day, seven days a week. NetBenefits SM website is a convenient way for you to enroll or manage your Future Roast account. You will need a minimum browser level of Microsoft Internet Explorer version 5.0 or Netscape Navigator/Netscape Communicator version 4.7. Before you go online, be sure to have the information listed on page 21 handy. Telephone Enrollment Fidelity (866) You can use the automated service virtually 24 hours a day, seven days a week. You may also speak to a Fidelity Service Representative Monday through Friday from 5:30 a.m. Pacific to 8 p.m. in your local time zone. Before you call, be sure to have the information listed on page 21 handy. 20 partners in building your dreams

23 ENROLLING Before you call or go online, be sure to have the following information handy: Your user ID and Personal Identification Number (PIN). Your user ID and PIN will be the same for Starbucks stock and savings plans on Fidelity NetBenefits. To reach NetBenefits SM, simply go to to access the log-in screen. To set up a new PIN, click New User Registration. You ll be asked to create a six- to 12-character PIN (consisting of a combination of letters and numbers). You ll also be asked for the following information: Social Security number Birthdate ZIP code The percentage of pay you want to contribute. Generally, you can contribute from 1% to 75% of your before-tax pay (regular and catch-up contributions combined), in whole percentages, up to the annual IRS or Future Roast limits. More information about contribution limits is provided on page 8. Your investment elections. You can invest in one or any combination of the available individual investment options. Or, you may select one of the blended investment options, based on your desired risk level. You decide. See the Investment Options and Frequent Trading Notice insert for more information. Transfer an Account Balance from Another Plan Do you have an account balance in a previous employer s 401(k) or other qualified plan? Consider combining your accounts. You may be able to roll over the balance from your previous plan s account. Contact Fidelity at (866) or online at for more information about rollover forms and instructions. Choose a Beneficiary When you enroll in Future Roast, you must name one or more beneficiaries to receive your account balance if you die. If you are married, your beneficiary must be your spouse unless your spouse consents in writing (with a notarized consent) to another beneficiary designation. This spousal consent requirement comes from the federal government, based on the federal definition of marriage, which states that a spouse is a husband or wife of the opposite sex. This definition does not prevent you from naming a same-sex spouse as your Future Roast beneficiary. However, unlike an opposite-sex spouse, a same-sex spouse is not automatically treated as your beneficiary you must designate your same-sex spouse as your beneficiary. Also, you do not need a same-sex spouse s consent to name someone else as your beneficiary. To designate a beneficiary for Future Roast, log on to Fidelity NetBenefits at access the Your Profile section and click on Beneficiaries. It is important to make your beneficiary(ies) designation and update it if you have a life-changing event, such as marriage, divorce, birth of a child or death in the family. Why Save in a 401(k) Plan? Reason# : You can put other money into your account. In most cases, you may transfer money (called a rollover ) into the Future Roast Plan from your former employer s eligible retirement plan or from an individual retirement account (IRA) that holds money from a former employer s eligible retirement plan. partners in building your dreams 21

24 ENROLLING CHANGE WHEN YOU NEED TO When your life changes, you can shift your Future Roast decisions, too, by calling Fidelity at (866) or making changes online through Fidelity NetBenefits at Why Save in a 401(k) Plan? Reason# : You can change your investment choices at any time. You can switch your accounts to different investment options and your change will be effective on the same, or next, stock market day. Your life is always changing. And Future Roast can change with you to meet your different needs. You can: Start, stop, increase or decrease your contribution percentage at any time Choose different investments for your future contributions at any time Move your existing account balance to different investment options at any time Borrow when you need to Take a hardship distribution KEEP TRACK OF YOUR ACCOUNT Stay in the know by keeping tabs on your account. Managing Your Account Keeping track of your account is easy. Just call or go online to: Review your account balances Review, increase or decrease your contribution rate Designate a beneficiary Request a loan Request a hardship withdrawal form Request a withdrawal or distribution Review or change your investment choices for your future contributions Review information about Future Roast s investment options (fund fact sheets and rate of return information) Transfer your account balances to any of Future Roast s other investment options Why Save in a 401(k) Plan? Reason# : Flexibility matters. You can start, stop or change your contributions as frequently as each pay period. In general, you can save from 1% to 75% of your eligible pay. Shortly after each quarter ends, Fidelity will mail a Future Roast account statement to your home. This statement details all activity and investment results for your account during the previous quarter. You can access your account online through Fidelity NetBenefits at or call Fidelity at (866) to speak with a Fidelity Service Representative or use the automated voice response system, virtually 24 hours a day, 7 days a week. 22 partners in building your dreams

25 ACCESSING Your money is THERE FOR YOU. Use it while you are working. Take it with you when you leave Starbucks.

26 ACCESSING ACCESS YOUR MONEY IF YOU NEED IT Need your money now? Here is what you can do. Borrow from Your Account If you need to, you can borrow from your Future Roast account, including rollover balances (money you rolled over into your account from another employer s eligible retirement plan). There are no early withdrawal penalties, and you repay yourself (with interest) through automatic payroll deductions. Future Roast offers two types of loans: a general purpose loan and a primary residence loan. You can take a general purpose loan for any reason. A primary residence loan can only be for the purchase of a home you are going to live in. Here are some other things to know: The minimum loan amount is $500. Why Save in a 401(k) Plan? Reason# : You can access your money while you are still working. Just because your money is not in your sock drawer does not mean you cannot access it. Though it is best to leave your money in Future Roast to grow, your savings are always yours and you may be able to take money out when you need to. You may take out a loan, apply for a withdrawal based on certain financial hardship reasons, withdraw from your rollover account or, if you are age 59½ or older, withdraw your money for any reason at all! The maximum loan amount is 50% of your account balance, up to a loan amount of $50,000 (less your highest outstanding loan balance in the prior 12 months, if any). Your Future Roast account will be charged $35, plus an annual maintenance fee of $15, for each new loan taken after March 31, The loan is due in full when you leave Starbucks. You must repay a general purpose loan within five years and a primary residence loan within 15 years. Special loan payback rules apply if you go on a leave of absence. You may have only one loan of each type outstanding at the same time. Why Borrow? Future Roast is one of the best ways to build long-term savings. But if you need to, you can always borrow from your account. You will not pay taxes on the amount you borrow, and you will pay yourself back with interest through easy payroll deductions. 24 Think about it. You might want to take a loan: For college tuition and books To buy a car To make a down payment on a home For home improvements For the security deposit to move into an apartment partners in building your dreams

27 ACCESSING In-Service Withdrawals Certain types of withdrawals are allowed while you are still working for Starbucks. Hardship withdrawals If you experience a financial hardship, you can withdraw a portion of your account to help relieve the burden. Events the IRS considers eligible for hardship withdrawals may include: Unreimbursed medical expenses for you and your dependents Home purchase (of your primary residence) Funeral and burial expenses for an immediate family member College tuition and certain related fees for you and your dependents Expenses to prevent your eviction from or foreclosure of your primary residence Expenses to repair certain kinds of damage to your primary residence Generally, you must have exhausted all other resources, including a loan from your Future Roast account, to be eligible for a hardship withdrawal. You are limited in the amount you may withdraw. If you are not age 59½ or older at the time of the distribution, you must pay a 10% early withdrawal penalty tax. For more information, contact Fidelity at (866) to speak with a Service Representative. Contact Fidelity at (866) or online through Fidelity NetBenefits at for more details about loans and withdrawals. Age-59½ withdrawals Once you reach age 59½, you may withdraw all or a portion of your account balance for any reason once a year without penalty. Rollover withdrawals If you have a rollover account in Future Roast, you may withdraw all or a portion of that account balance. You are limited to one withdrawal from your rollover account per year. If you are not age 59½ or older at the time of the distribution, you are required to pay a 10% early withdrawal penalty tax. Play to learn. Have fun. Go to and discover why saving through Future Roast may be one of the smartest moves you can make. partners in building your dreams 25

28 ACCESSING YOUR CHOICES WHEN YOU LEAVE When you end your employment with Starbucks, you can leave your money in Future Roast if your account balance is more than $1,000 (including the money in your rollover account, if any). You can also take your money with you. If you decide to take it with you, you can: Roll over your money into another employer s eligible retirement plan or an IRA. This way, you can continue to defer paying taxes on your savings. Take a lump-sum distribution. Distributions not rolled over to another employer s plan or an IRA are subject to a 20% federal withholding tax, a possible 10% early withdrawal penalty if you haven t reached age 55, regular federal income tax and any state taxes. Terminated partners will be assessed a quarterly maintenance fee. See the Future Roast Plan Description or contact Fidelity at (866) or online through Fidelity NetBenefits at for more details about rollovers, distributions and the annual maintenance fee. Why Save in a 401(k) Plan? Reason# : You may keep your money in Future Roast even if you leave Starbucks. As long as your account balance is more than $1,000 including your rollover account balance you may keep your account in the Future Roast Plan if you wish. It will continue to be invested based on your election. As a terminated participant, you will be subject to a small fee for the ongoing maintenance of your Starbucks account, charged quarterly to your account. 26 partners in building your dreams

29 RESOURCES DO IT NOW. Enroll online at or Enroll by speaking with a Fidelity Service Representative at (866) (Monday Friday, 5:30 a.m. Pacific to 8 p.m. in your local time zone).

30 RESOURCES YOUR RESOURCES Fidelity (866) or online at 401(k) enrollment and changes 401(k) loan and withdrawal forms Fund prospectuses and/or fund fact sheets Retirement planning information Investment basics Future Roast Interactive Site Fun place to learn about the Starbucks match, the power of compounding earnings and other plan features Investment and plan information Savings Bonds (Bureau of the Public Debt) Information on Treasury bills, savings bonds and government notes ADDITIONAL INVESTMENT AND RETIREMENT PLANNING RESOURCES Morningstar Specific fund information, including risk and return levels Online magazine and investment education tools Retirement planning information Investment basics GOVERNMENT RESOURCES Department of Labor Retirement savings plan information Social Security Social Security benefits information Personal Earnings and Benefit Estimate Statement 28 partners in building your dreams

31 Play to learn. Have fun. Discover why saving through Future Roast may be one of the smartest moves you can make.

32 2006 Starbucks Coffee Company. All rights reserved. Printed in the USA. P SKU# Printed on recycled paper: 100% post-consumer material