the economics of providing 401(k) plans: services, fees ... · employers offering 401(k) plans...

1401 H Street NW Suite 1200 Washington DC 20005 202326-5800 wwwiciorg

Research fundamentals

Sarah Holden ICI Senior Director Retirement and Investor Research and Michael Hadley ICI Associate Counsel prepared this report

August 2009 Vol 18 No 6

The Economics of Providing 401(k) PlansServices Fees and Expenses 2008

Why Employers Offer 401(k) Plans

During the past two decades 401(k) plans have

become a popular workplace benefi t valued for their

role in providing employees a means to set aside a

portion of their compensation on a tax-favored basis

Indeed 401(k) plans have become the most common

defi ned contribution (DC) plan serving about

50 million active participants and holding $23 trillion

in assets at year-end 2008 (Figure 1)1 In the past

18 years mutual funds have become a primary provider

of 401(k) plan investments with the share of employer-

sponsored 401(k) plan assets held in funds increasing

from 9 percent in 1990 to 55 percent in 2007 and

resting at 49 percent at year-end 20082

Employers that decide to offer 401(k) plans an

optional employee benefi t are confronted with two

competing economic pressures the need to attract and

retain qualifi ed workers with competitive compensation

packages and the need to keep their products and

services competitively priced As a fi rm increases

overall compensation to its employees it increases its

ability to hire and retain workers but it also increases

the costs of producing its products and services

To provide and maintain 401(k) plans employers

are required to obtain a variety of administrative

participant-focused regulatory and compliance

services All of these services involve costs generally

the plan sponsor and the plan participants share these

costs

Key Findings

401(k) plans are a complex employee benef it to maintain and administer and they are subject to an bull

array of rules and regulations Employers offering 401(k) plans typically hire service providers to

operate these plans and these providers charge fees for their services

Employers and employees generally share the costs of operating 401(k) plans bull As with any employee

benefit the employer typically determines how the costs will be shared

Nearly half of the $23 trillion in 401(k) assets at year-end 2008 was invested in mutual funds bull

primarily in stock funds Mutual funds are required by law to disclose a large amount of information

including information about fees and expenses and portfolio turnover

401(k) investors in mutual funds tend to hold low-cost funds with below-average portfolio turnover bull

Both characteristics help to keep down the costs of investing in mutual funds through 401(k) plans

Page 2 Fundamentals August 2009 Vol 18 No 6

Paying for 401(k) Plan Services

401(k) Plans Are Strictly Regulated

401(k) plans are complex to maintain and administer

and they are subject to an array of rules and regulations

that govern their operation including Section 401(k) of

the Internal Revenue Code (IRC) which serves as the

basis for their tax-favored treatment3 The Department

of the Treasury and the Internal Revenue Service

(IRS) enforce the tax code and impose numerous

requirements that plans must satisfy in order to qualify

for special tax treatment4 Furthermore the plans must

meet many statutory and regulatory requirements

under the Employee Retirement Income Security Act

of 1974 (ERISA) enforced by the Department of Labor

(DOL)

401(k) Plan Sponsors Provide Certain Services

When an employer offers a 401(k) plan to its

employees it selects an individual or group of

individuals known as plan fi duciaries5 to oversee the

administration of the 401(k) plan for the exclusive

benefi t of plan participants consistent with the terms

of the plan and ERISA The plan fi duciaries must

arrange for the provision of the many services required

to create and maintain a 401(k) plan

Table of Contents

Why Employers Offer 401(k) Plans 1

Paying for 401(k) Plan Services 2

401(k) Plans Are Strictly Regulated 2

401(k) Plan Sponsors Provide Certain Services 2

Administrative services 4

Participant-focused services 4

Regulatory and compliance services 5

Plan Sponsors Must Ensure That Service Costs Are Reasonable 5

Plan Sponsors Select Service Providersand Investment Arrangements 5

A Means to Compare The ldquoAll-Inrdquo 401(k) Plan Fee 7

A range of fees is found across 401(k) plans 7

Many factors affect the ldquoall-inrdquo fee 7

Fees Paid by Employer Plan and Participants 8

Looking at Fees and Expenses of Mutual Funds Held in 401(k) Accounts 9

Investors Pay Two Types of Mutual Fund Fees and Expenses 9

Mutual fund share classes 9

Mutual fund expenses 11

401(k) Participants Hold Low-Cost Mutual Funds 12

Stock funds 12

Bond funds 12

Money market funds 12

A range of mutual fund fees is found across 401(k) plans 12

Other Costs Incurred by Mutual Fund Investors 15

Stock fund turnover rates 15

Conclusion 16

Notes 17

References 21

Appendix 23

August 2009 Vol 18 No 6 Fundamentals Page 3

Figure 1

401(k) Plan Assets and Participants

144

401(k) plan assets

(billions of dollars selected years)

385

864

1725

2396

401(k) plan participants

(millions selected years)

2768

11

101

21

19

1

31

28

4

48

9

40

57

11

46

62

12

50

Retired and separated

Active

3025

61

12

49

2008e2007e200620052000199519901985

2008e2007e2006e2005e2000199519901985

2320

62

12

50

eData are estimated

Note Components may not add to the total because of rounding

Sources Investment Company Institute Federal Reserve Board and US Department of Labor (Employee Benef its Security Administration and Bureau of Labor Statistics)


Administrative services These services maintain

the framework of a 401(k) plan and include

recordkeeping functions such as maintaining plan

and participant records and the creation and delivery

of plan participant account statements (Figure 2)

DOL regulations require plans to allow participants

to make changes to their investment elections at

least quarterly6 but most 401(k) plan participants

are permitted to make daily transactions in their

plans7 Administrative service providers support

these activities processing each and every participant

transaction In addition plan fi duciaries must arrange

for administrative services relating to setting up

converting or terminating a plan and trustee services8

Participant-focused services These services are

geared toward helping employees fully achieve the

benefi ts of their 401(k) plans Sponsors provide

participants with a wide array of communications

educational resources and advice services to assist

in investment and retirement planning (Figure 2)9

In addition the plan fi duciaries select a lineup of

professionally managed investment options that cover

a range of return and risk10 sometimes including a

brokerage window through which participants may

select individual securities If a 401(k) plan sponsor

chooses to permit loans plan fi duciaries must arrange

for loan processing services In addition plans may opt

to provide participants with access to insurance and

annuity services at the time of retirement

Figure 2

Services Provided to 401(k) Plans

Administrative services

Recordkeeping including maintaining plan records processing employee enrollment processing participantsrsquo investment elections contributions and distributions and issuing account statements to participants

Transaction processing including purchases and sales of participantsrsquo assets

Plan creationconversiontermination requiring administrative services

Trustee services providing the safe holding of the planrsquos assets in a trust as required by ERISA

Participant-focused services

Participant communication including employee meetings call centers voice-response systems web access and preparation of summary plan description and other participant materials

Participant education and advice including online calculators and face-to-face investment advice

Investment management typically offered through a variety of professionally managed investment options

Brokerage window if offered allowing direct purchase of individual securities by plan participants

Maintenance of an employer stock fund if offered to facilitate the purchase of employer securities within the plan

Loan processing if a loan feature is offered

Insurance and annuity services if offered including offering annuities as distribution options

Regulatory and compliance services

Plan document services including off-the-rack ldquoprototyperdquo plans

Consulting including assistance in selecting the investments offered to participants

Accounting and audit services including preparation of annual report (Form 5500)

Legal advice including advice regarding interpretation of plan terms compliance with legal requirements plan amendments and resolution of benefi t claims

Plan testing to comply with Internal Revenue Code nondiscrimination rules

Processing of domestic relations orders ensuring that the split of accounts pursuant to divorce orders complies with ERISA

Sources Investment Company Institute and US Department of Labor


Regulatory and compliance services These services

ensure that a plan fulfi lls legal requirements imposed

by statute DOL and IRS regulations and other

guidance (Figure 2) Plans are subject to complicated

restrictions on contributions11 lengthy audited annual

reports to the DOL12 and tax reporting to the IRS

Plans may have additional compliance burdens under

federal securities or state laws13 Furthermore each

particular investment option has its own compliance

requirements For example mutual funds must comply

with the Investment Company Act of 1940 and other

securities laws bank collective trusts with banking

regulations and group annuity contracts with state

insurance rules

Plan Sponsors Must Ensure That Service Costs Are Reasonable

By law plan sponsors have a ldquoresponsibility to ensure

that the services provided to their plan are necessary

and the cost of those services is reasonablerdquo14 To

assist plan sponsors in this responsibility the DOL

makes a model fee disclosure form15 available to plan

sponsors and offers a number of publications to help

plan sponsors review the fees charged by current or

potential service providers16 In addition a number of

proposals to enhance the rules governing disclosure

in 401(k) plans have been put forward by the DOL and

in Congress17 Because all services have costs fees are

only one factor among many that a plan sponsor must

consider along with the extent and quality of service

and the characteristics of the investment options

chosen18

Plan Sponsors Select Service Providers and Investment Arrangements

Plan sponsors select the service providers and choose

the investment alternatives offered in their 401(k)

plans19 The costs of running a 401(k) plan generally

are shared by the plan sponsor and participants and

the arrangements vary across plans The fees may

be assessed at a plan level participant-account level

as a percentage of assets or as a combination of

arrangements

About the DeloitteICI Defi ned Contribution Plan401(k) Fee Study

In late 2008 Deloitte conducted a confidential no-cost web-based survey of plan sponsors The goal of the survey was to address

the mechanics of plan fee structures bull

components of plan fees and bull

primary and secondary factors that impact fees (ldquofee driversrdquo) bull

Due to the variety of fee and service structures that exist in the DC401(k) market the study created an analytical toolmdashthe ldquoall-inrdquo feemdashthat represents the bottom line in terms of all administrative and investment-related fees for each plan The ldquoall-inrdquo fee incorporates all administration recordkeeping and investment fees whether assessed at a plan level participant-account level or as an asset-based fee across all multiple parties providing services to the plan The ldquoall-inrdquo fee excludes participant activityndashrelated fees that only apply to particular participants engaged in the activity (eg loan fees) In addition the ldquoall-inrdquo fee does not evaluate the quality of the products and services provided

In total 130 plans participated in the survey providing detailed information regarding plan characteristics design demo-graphics products services and their associated fees While the survey is not intended to be a statistical representation of the DC401(k) marketplace the demographics of the plans participating in the survey appear to be similar to the broader DC plan market (eg average account balance number of investment options average participant contribution rate asset allocation plan design) Although Deloitte and ICI believe the survey results are representative they cannot be projected to the entire population of US 401(k) plans


Figure 3 presents a schematic of fee and service

arrangements possible in 401(k) plans As shown in

the boxes on the left-hand side of Figure 3 employers

plans and participants consume services in 401(k)

plans The boxes on the right-hand side of

Figure 3 highlight the recordkeeper or retirement

service provider and investment provider that deliver

the investment products or investment management

services or both The blue dashed arrows indicate

the services and products provided For example

the investment provider offers investment products

and asset management to participants while the

recordkeeper provides services to the plan as well as

to the participants The solid black arrows illustrate

the payment of fees for the services and products

Participants may pay directly for recordkeeping

services or the plan or employer may pay directly

for such services Participants may pay indirectly

for recordkeeping services through investment

expense ratios (solid black arrow from participants

to investment providers) if the investment provider

covers some recordkeepingadministrative expenses

by sending payment to the recordkeeper (solid black

arrow at the far right) for recordkeeping services

rendered (blue dashed arrow between recordkeeper

and investment provider)

The DOL requires that the plan sponsor pay the

costs associated with the initial design of the plan as

well as any design changes20 Beyond these design

services employers can share the costs of the plan

services with their employees (Figure 3) However

many employers voluntarily cover some or all of plan-

related costs that legally could be shouldered by the

plan participants Any costs not paid by the employer

which may include administrative investment legal

and compliance costs are effectively paid by plan

participants21

Figure 3

A Variety of Arrangements May Be Used to Compensate 401(k) Service Providers

Services and products provided

Fee paymentform of fee payment

Direct fees dollar per participant percentage basedon assets transactional fees

Recordkeeping and administration plan service andconsulting legal compliance and regulatory

Participant service education advice and communication

Expense ratio (percent of assets)

Asset management investment products

Employerplan

Participants Investment provider(s)

Recordkeeper

retirement service

provider

Direct fees dollar per participant percentage based on assets transactional fees

Recordkeepingdistribution

Recordkeepingadministrative

payment(percentage

of assets)

Note In selecting the service provider(s) and deciding the cost sharing for the 401(k) plan the employerplan sponsor will determine which combinations of these fee arrangements will be used in the plan

Source Investment Company Institute summary of DeloitteInvestment Company Institute Defined Contribution401(k) Fee Study


A Means to Compare The ldquoAll-Inrdquo 401(k) Plan Fee

As illustrated by Figure 3 a variety of fee arrangements

occurs in the 401(k) plan arena with fees possibly

being assessed per plan per participant or per dollar

invested (asset-based fees) To compare fees across

plans it is necessary to construct a measuremdashan

ldquoall-inrdquo feemdashthat converts this array of arrangements

into a single number for each plan Constructing such

an ldquoall-inrdquo fee as a percentage of plan assets permits

comparison across plans to determine the key factors

that infl uence plan fees

A range of fees is found across 401(k) plans A

survey of 130 plan sponsors in late 2008 found that the

key driver of the ldquoall-inrdquo fee was plan size Specifi cally

plans with more participants and larger average

account balances tended to have lower ldquoall-inrdquo fees

than plans with fewer participants and smaller average

account balances22 Likely this observed effect results

in part from fi xed costs required to start up and run the

plan much of which are driven by legal and regulatory

requirements It appears that economies are gained as

a plan grows in size because these fi xed costs can be

spread over more participants or a larger asset base or

both

Many factors affect the ldquoall-inrdquo fee23 For example

lower ldquoall-inrdquo fees were also associated with plans

where the participants and plan sponsor made a

commitment to saving through higher participant

and employer contribution rates or use of automatic

enrollment In addition DC plan sponsors that had

multiple relationships with their DC plan service

providers had lower ldquoall-inrdquo fees24 Because equity

investments are more costly to manage than bond

or money funds a plan with a lower allocation to

equities tended to have lower fees compared to a plan

more heavily invested in equities Among small plan

sponsors those with fewer business locations tended

to have lower fees than those with more locations

This perhaps refl ects the servicing burden imposed

by having more locations For example there are

additional costs incurred by conducting employee

meetings in multiple locations

Other factors were examined but found to have a

minimal impact on the ldquoall-inrdquo fee For example the

number of payrolls did not signifi cantly impact the

ldquoall-inrdquo fee The type of service provider (eg mutual

fund company life insurance company bank third

party administrator) the size of the service providerrsquos

platform (in terms of number of participants) and

the length of relationship with the service provider

were each analyzed and also did not appear to have

a separate impact on the ldquoall-inrdquo fee Finally the

percentage of plan assets invested in proprietary

investment productsmdashthe investment products of the

service providermdashdid not appear to have an impact on

the ldquoall-inrdquo fee


Figure 4

Plan Fee Structure Varied by Plan Size

Percentage of ldquoall-inrdquo1 fee by payer of fees by plan size2 2008

66

Participant

Employer

Plan3

gt$500 million$100 million to$500 million

$10 million tolt$100 million


lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

1The ldquoall-inrdquo fee incorporates all administrative recordkeeping and investment fees whether assessed at a plan level participant-account level or as an asset-based fee across all parties providing services to the plan The ldquoall-inrdquo fee excludes participant activityndashrelated fees that only apply to particular participants engaged in the activity (eg loan fees)2Percentages within a given asset size segment may not add to 100 percent because of rounding3Other survey results suggest this is generally achieved through for feited employer contributions (see text endnote 21)

Note Figure based on sample of 130 plans surveyed in late 2008


Fees Paid by Employer Plan and Participants

The fees and expenses related to 401(k) plan services

and products can be paid by the employer the plan

or the participants with the allocation determined by

the plan sponsor The DeloitteICI survey of 130 plans

found that employers that sponsor smaller plans (plans

with less than $10 million in assets) on average carried

a larger share of plan fees than employers sponsoring

larger plans (plans with $10 million or more in assets

Figure 4) As a result the employerrsquos decision to pay a

portion of plan costs can have a signifi cant impact on

the 401(k) plan fees charged to plan participants It is

often the case that the employer pays part or all of the

administrative or recordkeeping expenses25 26 which

also can have an impact on the fees and expenses of

the investment options in their plans27 For example

when the plan sponsor or plan participants pay direct

account charges the expenses on the investment

products in these plans will tend to be lower than in

those plans where there are no account-level charges

and the recordkeeping expenses are included in the

investment expenses


Figure 5

About Half of 401(k) Plan Assets Were Invested in Mutual Funds

Percentage of assets 2008

Total 401(k) assets $23 trillion Total mutual fund 401(k) assets $11 trillion

49

51 Other investments

Mutual funds

Bond funds12

10 Money market funds

Stock funds 78

Stock funds include hybrid mutual funds which account for 20 percent of total 401(k) mutual fund assets

Sources Investment Company Institute Federal Reserve Board and US Department of Labor

Looking at Fees and Expenses of Mutual

Funds Held in 401(k) Accounts

Virtually all participant-directed 401(k) plans offer

a variety of pooled investment options (such as a

selection of mutual funds collective trusts and

or separately managed accounts) but some also

include guaranteed investment contracts (GICs)28

company stock29 or a brokerage window that provides

participant access to direct investment in stocks

bonds and other securities30 All told close to half

(49 percent) of the $23 trillion in 401(k) plan assets

at year-end 2008 was invested in mutual funds

(Figure 5)31 Mutual funds are required by law to

disclose their fees and expenses and as part of

ongoing research ICI studies trends in those fees and

expenses32 In addition ICI separately tracks 401(k)

plan account holdings of mutual funds33 This report

combines the results of these analyses in order to

examine the fees and expenses that investors incur on

mutual funds held in 401(k) accounts34 This analysis

fi nds that

401(k) plan participants tend to be invested in low- bull

cost mutual funds

at year-end 2008 79 percent of mutual fund assets bull

in 401(k) plans were held in ldquono-loadrdquo funds and

about one-fi fth of mutual fund assets in 401(k) bull

plans were held in load funds predominantly in

fund shares that do not charge retirement plan

participants a front-end load

Investors Pay Two Types of Mutual Fund Fees and Expenses

Investors in mutual funds potentially can incur two

primary types of fees and expenses when purchasing

and holding mutual fund shares sales loads and

mutual fund expenses Sales loads are one-time fees

paid either at the time of purchase (front-end loads) or

in some cases when shares held less than a specifi ed

number of years are redeemed (back-end loads also

known as contingent deferred sales loads or CDSLs)

Mutual fund expenses include ongoing charges for

portfolio management fund administration and

shareholder service as well as fund distribution

charges also known as 12b-1 fees35

Mutual fund share classes The combination of

sales loads and 12b-1 fees that an individual investor

might pay depends on the fund share class It is

now commonplace for mutual funds to offer several

different share classes36 all of which invest in the

same portfolio (fund) while offering different services

tailored to the service needs of different investors or

in the case of 401(k) plans the group of participants in

the plan

0 Fundamentals August 2009 Vol 18 No 6

Figure 6

401(k) Mutual Fund Assets by Share Class

Percentage of assets1 selected years

No-load4

79

Front-end load2

Other load3

Load retirement shares

No-load retirement shares4

Institutional no-load4

No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60

1Percentages may not add to 100 percent because of rounding2Front-end load gt 1 percent Primarily includes A shares includes assets where front-end loads are waived3Other load share classes include share classes not classif ied as front-end-load or load retirement shares The category includes back-end-load classes (primarily B shares) level-load classes (primarily C shares) and other load share classes See Figure A2 for additional detail4No-load shares front-end load = 0 percent CDSL = 0 percent and 12b-1 fee le 025 percent 5Load retirement shares represented less than 05 percent of 401(k) mutual fund assets in these years

Note Figures exclude mutual funds available as investment choices in variable annuities and tax-exempt mutual funds

Sources Calculated based on data from the Investment Company Institute Lipper Value Line Publishing Inc CDAWiesenberger Investment Companies Service Survivor-Bias-Free US Mutual Fund Database copy2009 Center for Research in Security Prices (CRSPreg) The University of Chicago Booth School of Business Primary Datasource and Strategic Insight Simfund

No-load funds institutional shares no-load retail

shares and no-load retirement shares A mutual fund

may set up a multiclass share structure to pay for

differing advice and shareholder services offered to

different investors investing in the same portfolio or

fund One type of fund or share class can be a ldquono-load

fundrdquo These funds or share classes charge no front-end

load or CDSL and charge a 12b-1 fee of 25 basis points

(025 percent a basis point is one one-hundredth of

a percentage point) or less At year-end 2008 with

41 percent of 401(k) mutual fund assets no-load

retail funds were the most common share class

(Figure 6)37 The second largest no-load share-class

type was institutional shares a share class that

typically has large average shareholder accounts and

low expense ratios which have gained share of 401(k)

mutual fund assets over the past several years At

year-end 2008 no-load institutional share classes

accounted for 29 percent of 401(k) mutual fund assets

compared with 23 percent at year-end 2007 and

14 percent in 1996 Altogether 79 percent of 401(k)

plan mutual fund assets were invested in no-load

funds at year-end 2008


Load funds front-end-load shares back-end-load

shares level-load shares and load retirement shares

The remaining 21 percent of mutual fund 401(k) assets

were invested in ldquoload fundsrdquo but the actual loads are

generally waived for retirement plan investors

Front-end-load shares For example one load share bull

class carries a front-end load which is a percentage

of the fundrsquos sale or offering price and is normally

charged at the time of purchase Yet 401(k) plan

participants generally are not charged a front-end

load on shares purchased through their plans38

Front-end-load shares have a 12b-1 fee typically

between 25 and 35 basis points Fourteen percent of

401(k) mutual fund investments were held through

front-end-load shares in 2008 (Figure 6)

Back-end-load shares Back-end-load shares are bull

offered for sale at net asset value without a front-

end load but such share investors pay for some

401(k) plan services through a combination of an

annual 12b-1 fee and a CDSL39 Back-end-load shares

represented a negligible percentage of mutual fund

assets held in 401(k) plans (Figure 6)

Level-load shares Level-load shares which also use bull

a combination of an annual 12b-1 fee and a CDSL40

represented a small share of 401(k) mutual fund

assets (Figure 6)

Retirement shares Retirement shares which are a

share class specifi cally designed to meet the servicing

needs of employer-sponsored plans grew to represent

15 percent of 401(k) mutual fund assets in 2008

(Figure 6)41 Virtually a nonexistent pricing option in

1996 retirement shares are more likely to be no-load

(9 percent of the total) than load funds (6 percent of

the total)

Mutual fund expenses Although 401(k) investors

typically do not pay loads on the mutual funds they

purchase through their 401(k) plans they do incur the

fund expenses of the mutual funds they are holding

in their 401(k) accounts The total expense ratio

which refl ects both the operating expense ratiomdash

including portfolio management fund administration

shareholder service and other miscellaneous costsmdash

and 12b-1 fees is measured in this report as an asset-

weighted average Using the asset-weighted average to

measure costs provides an aggregate estimate of what

401(k) participants actually pay to invest in mutual

funds through their 401(k) plans Under this approach

funds with larger shares of 401(k) mutual fund assets

contribute proportionately more to the summary

measure than do less widely held funds


401(k) Participants Hold Low-Cost Mutual Funds

Stock funds Seventy-eight percent of 401(k) plan

assets invested in mutual funds were invested in stock

funds at year-end 2008 (Figure 5)42 43 The average

total expense ratio incurred by 401(k) investors in stock

funds was 072 percent in 2008 half of the

144 percent simple average for all stock funds and

lower than the industrywide asset-weighted average of

084 percent (Figure 7) 401(k) mutual fund investors

not only incur low average expense ratios in stock

funds overall but also in each broad type of stock fund

domestic stock funds hybrid funds and foreign stock

funds (Figure 8)

Several factors contribute to the relatively low

average expense ratios incurred by 401(k) plan

participants investing in mutual funds Both inside and

outside the 401(k) plan market mutual funds compete

among themselves and with other fi nancial products

to offer shareholders service and performance44

Shareholders are sensitive to the fees and expenses

that funds charge45 Indeed new sales and assets

tend to be concentrated in lower-cost funds providing

a market incentive for funds to offer their services

at competitive prices46 In the 401(k) plan market

performance- and cost-conscious plan sponsors also

impose market discipline Plan sponsors regularly

evaluate the performance of the plansrsquo investments47

and performance refl ects fees In 2007 more than half

(64 percent) of plan sponsors indicated that they had

replaced a fund in the past two years because of poor

performance48

The lower average expense ratios incurred by

401(k) participants also refl ect other factors Some

plan sponsors choose to cover a portion of 401(k)

plan costs which allows them to select funds or share

classes with less built-in servicing costs Furthermore

many 401(k) plans have large average account balances

and such economies of scale help to reduce the fees

and expenses of the funds offered in these plans49

Finally unlike shareholders outside of 401(k) plans who

typically pay for the assistance of a fi nancial adviser

when investing in mutual funds50 there is a more

limited role for such fi nancial adviser services inside

these plans

Although expense ratios vary among the mutual

funds that 401(k) participants hold 77 percent of

401(k) plan stock fund assets were invested in mutual

funds with expense ratios less than 1 percent at year-

end 2008 (Figure 9) Twenty-eight percent of 401(k)

stock fund assets were in mutual funds with expense

ratios less than 050 percent51

Bond funds Twelve percent of 401(k) mutual fund

assets were invested in bond funds at year-end 2008

(Figure 5) and 401(k) bond fund investors also have

concentrated their assets in low-cost bond funds At

year-end 2008 401(k) bond fund investors paid total

fees and expenses of 052 percent about half the

industrywide simple average (106 percent) and nearly

one-fi fth less than the industrywide asset-weighted

average of 063 percent (Figure 7) As with stock funds

the average expense ratio paid by 401(k) investors in

bond funds is also lower in each of the broad sub-

groupings within bond funds (Figure 8)

Money market funds Ten percent of 401(k) mutual

fund assets were invested in money market funds

at year-end 2008 (Figure 5) For 401(k) participants

holding money market funds their total expense ratio

was 038 percent of assets in 2008 compared with an

industrywide simple average of 061 percent (Figure 7)

In recent years the 401(k) money market fund asset-

weighted total expense ratio averages have been very

close to the industrywide asset-weighted averages

A range of mutual fund fees is found across 401(k)

plans Although as a group mutual fund investors

inside 401(k) plans own funds with below-average

costs some 401(k) plan participants pay more than

these averages and other participants pay less

Thus these averages do not necessarily refl ect the

reasonableness of the fees for any particular plan


Figure 7

401(k) Mutual Fund Investors Tend to Pay Lower-Than-Average Expenses

Percent 1997ndash2008

00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds

Industry average expense ratio1

401(k) average expense ratio2

Industry simple average expense ratio

144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037

1The industry average expense ratio is measured as an asset-weighted average2The 401(k) average expense ratio is measured as a 401(k) asset-weighted average




Figure 9

401(k) Stock Fund Assets Are Concentrated in Low-Cost Funds

Percentage of 401(k) stock mutual fund assets 2008

28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050

The total expense ratio which is reported as a percentage of fund assets includes mutual fund operating expenses and 12b-1 fee

Note Figures exclude mutual funds available as investment choices in variable annuities Stock mutual funds include hybrid funds Percentages do not add to 100 percent because of rounding

Sources Investment Company Institute and Lipper

Figure 8

Asset-Weighted Average Total Mutual Fund Expense Ratios

Percent 1996 2006 2007 and 2008

1996 2006 2007 2008

401(k)1 Industry2 401(k)1 Industry2 401(k)1 Industry2 401(k)1 Industry2

Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063

High yield and world bond 107 117 086 095 085 092 086 090

Other bond 064 082 053 061 051 060 049 058

Money market funds 043 052 043 041 039 039 038 037

1The 401(k) average expense ratio is measured as a 401(k) asset-weighted average 2The industry average expense ratio is measured as an asset-weighted average



As noted earlier in addition to the impact of

the range and quality of services provided a variety

of factors affect the ldquoall-inrdquo fees of 401(k) plans

Furthermore as with any other employee benefi t

the costs associated with 401(k) plans are typically

shared between the employer and plan participants

Participants who work for employers that do not heavily

subsidize their plans will incur higher fees on average

Plans that charge account-level fees will tend to have

lower-cost investment options than plans without

direct account-level charges Participants in plans with

a small amount of assets will pay higher fees than

plans with greater assets because of the relatively fi xed

costs that all plans must incur Participants in plans

that have many small accounts will typically pay higher


Figure 10

Average Portfolio Turnover Rate1 of Stock Funds

Percentage of assets 2001ndash2008

0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110

Average portfolio turnover rate experienced by stock mutual fund shareholders1 2

Average portfolio turnover rate experienced by 401(k) stock mutual fund shareholders1 3

Simple average turnover rate of stock mutual funds1

86

47 46

95

5145

104

5950

1The turnover rate for each fund is calculated by dividing the lesser of purchases or sales of portfolio securities for the reporting period by the monthly average value of the portfolio securities owned by the fund during the reporting period2 Average portfolio turnover rate experienced by stock mutual fund shareholders is measured as an asset-weighted average annual turnover rate based on the assets held in each fund (reported as a percentage of fund assets) 3Average portfolio turnover rate experienced by 401(k) stock mutual fund shareholders is measured as an asset-weighted average annual turnover rate based on 401(k) plan assets held in each fund (reported as a percentage of 401(k) fund assets)

Note Figures exclude mutual funds available as investment choices in variable annuities Stock funds include hybrid funds

Sources Investment Company Institute and Strategic Insight Simfund

fees per dollar invested than plans with fewer and

larger accounts Plans with more service features will

tend to be more costly than more streamlined plans

with fewer services for plan participants All of these

factors infl uence the costs of the plan and the planrsquos

investment options and must be considered when

evaluating the reasonableness of a given planrsquos costs

Other Costs Incurred by Mutual Fund Investors

Another cost that mutual funds incur is the cost

associated with buying and selling securities in the

fundrsquos portfolio While these costs are not included

in the fundrsquos total expense ratio they are refl ected in

the calculation of net return to the investor To help

shareholders evaluate the trading activity of a mutual

fund the Securities and Exchange Commission (SEC)

requires each mutual fund to report its ldquoturnover raterdquo

in its annual shareholder report and in its prospectus52

Broadly speaking the turnover rate is a measure of how

rapidly a fund is trading the securities in its portfolio

relative to total fund assets53 Although all pooled

investments incur trading costs while managing their

portfolios only mutual funds are required to provide

standardized information on portfolio turnover

Stock fund turnover rates 401(k) plan participants

tend to own stock funds with relatively low turnover

rates The industrywide simple average turnover rate

in stock funds was 104 percent in 2008 (Figure 10)54

However mutual fund shareholders tend to invest in

stock funds with considerably lower turnover rates

as refl ected in the lower industrywide asset-weighted

average turnover rate of 59 percent55 The average

turnover rate experienced in stock funds selected by

401(k) plan participants is similarly lower the asset-

weighted average turnover of stock funds held in

401(k) accounts was 50 percent in 2008


Conclusion

401(k) plans are now the most common private-sector

employer-sponsored retirement plan in the United

States Employers choose whether to offer these plans

to employees as part of their total compensation

packages employees choose whether or not to

participate The creation and maintenance of a 401(k)

plan involve a variety of services and the costs of these

services are generally shared by the plan sponsor and

the plan participants

401(k) plans provide many American workers

with the opportunity to invest cost effectively in

mutual funds 401(k) participants primarily invest in

stock funds and the bulk of these stock fund assets

is held in low-cost mutual funds with low portfolio

turnover Numerous factors contribute to the

relatively low expense ratios incurred by 401(k) plan

participants investing in mutual funds Among them

are (1) competition among mutual funds and other

investment products to offer shareholders service

and performance (2) plan sponsorsrsquo decisions to

cover a portion of the 401(k) plan costs which allow

them to select funds or share classes with less built-in

servicing (3) economies of scale that a large investor

such as a 401(k) plan can achieve (4) cost-conscious

and performance-conscious decisionmaking by plan

sponsors and (5) the limited role of professional

fi nancial advisers in these plans


sheets Internetintranet sites webinars podcasts seminars workshops paycheck stuffers retirement gap calculators posters and individually targeted communication The most commonly cited primary purpose for plan education is increasing participation (361 percent of plans)

10 Where participants are given the control of the investment of their accounts which is common in 401(k) plans the selection of the investment options available is usually designed to meet the requirements of Section 404(c) of ERISA This section provides liability relief for plan sponsors and other plan fi duciaries from losses in plan accounts resulting from employeesrsquo exercise of investment control The DOL regulations under ERISA Section 404(c) are designed to ensure that participants have control over their assets and have adequate opportunity to diversify their holdings Plans must offer at least three diversifi ed investment options with materially different risk and return characteristics (Although company stock or any individual stock can be offered in 401(k) plans they would not qualify as one of the core options) Plans generally must allow transfers among the diversifi ed investment options at least quarterly Hewitt Associates 2007 indicates 90 percent of the 292 plans surveyed in the spring of 2007 considered themselves compliant with ERISA Section 404(c) Profi t Sharing401k Council of America 2008 indicates that in 2007 the average number of investment fund options available for participant contributions was 18 Hewitt Associates 2007 indicates an average number of investment options of 17 in 2007 (although if premixed portfolios are excluded the average number of investment options offered is 12)Deloitte Consulting LLP International Foundation and the International Society of Certifi ed Employee Benefi t Specialists 2008 reports that the average number of funds offered by the 436 401(k) plan sponsors in their survey was 17 in 2007

11 The IRC includes a number of fl at annual dollar contribution limits In addition several sections of the IRC provide a framework for nondiscrimination testing which limits contributions to 401(k) plans to ensure that employees in all income ranges benefi t from the plan For example the actual deferral percentage (ADP) nondiscrimination test essentially requires that the before-tax contributions of highly compensated employees (as a percentage of their eligible compensation) do not exceed the contributions of non-highly compensated employees (as a percentage of their eligible compensation) by more than a specifi ed amount

12 Plans fi le their annual reports on Form 5500 which is a joint form of the DOL IRS and the Pension Benefi t Guaranty Corporation (PBGC)

13 For example plans may incur costs responding to requests for information pursuant to Securities and Exchange Commission (SEC) Rule 22c-2 under which mutual funds may obtain trading information necessary to ensure compliance with the fundrsquos short-term trading policies In addition 401(k) plans that allow participants to invest in the employerrsquos stock must register with the SEC on Form S-8 ERISA preempts most state laws that relate to employee benefi t plans but plans may still need to comply with state tax laws relating to withholding and information fi ling

Notes

1 See Investment Company Institute 2009b and Brady Holden and Short 2009a

2 See Investment Company Institute 2009b and Brady

Holden and Short 2009a

3 Section 401(k) of the IRC was added by Congress in 1978

to be effective beginning in 1980 (see Revenue Act of 1978

PL 95-600) However companies generally did not begin to

adopt 401(k) plans until the Department of Treasury and IRS

issued proposed regulations clarifying the scope of Section

401(k) on November 10 1981 (see 46 Fed Reg 55544

November 10 1981 Holden Brady and Hadley 2006)

4 The main advantages of a tax-qualifi ed 401(k) plan are that employers are able to take an immediate deduction for contributions made by the employer employees are able to defer taxation of contributions and employees do not pay income tax on contributions or earnings until the monies are distributed In exchange for this special tax treatment the IRC imposes numerous conditions many of which are designed to ensure that participants in all income ranges attain the benefi ts of the plan For additional discussion see for example Allen et al 1997 Since 2006 employers can offer a Roth 401(k) option which like Roth IRAs allows employees to contribute on an after-tax basis but receive distributions tax free Like Roth IRAs earnings are subject to income tax if the employee distributes them within fi ve years of fi rst contributing to the Roth 401(k) or before reaching age 59frac12

5 ERISA requires that the plan sponsor appoint a ldquonamedrdquo fi duciary or fi duciaries to administer the plan See ERISA sect 402 A plan sponsor may and often does name itself as the plan administrator In its role as the plan administrator the employer assumes fi duciary responsibility to select and monitor service providers and investment options for the plan Most employers appoint a retirement committee consisting of senior human resource or other employees to oversee the administration of the plan In their role acting for the employer as plan administrator the members of the committee assume fi duciary responsibility to administer the plan solely in the interest of plan participants and benefi ciaries For convenience this report often refers to ldquoemployerrdquo and ldquoplan sponsorrdquo to mean the fi duciary or fi duciaries appointed to administer the plan

6 Department of Labor Reg sect 2550404c-1

7 Hewitt Associates 2006 reports that nearly all of the 130 large DC plans covered in their report offered daily transfers Profi t Sharing401k Council of America 2008 indicates that nearly 90 percent of the 1011 profi t-sharing and 401(k) plans surveyed offer to participants the ability to initiate daily fund transfers

8 To protect the 401(k) planrsquos assets ERISA Section 403 requires that pension plan assets be held in a trust or invested in insurance contracts

9 Profi t Sharing401k Council of America 2008 reports the array of educational resources used by plan sponsors which include enrollment kits newsletters fund performance


14 See US Department of Labor Employee Benefi ts Security Administration ldquoUnderstanding Retirement Plan Fees and Expensesrdquo

15 This form was developed by the Investment Company Institute (ICI) along with the American Council of Life Insurers (ACLI) and the American Bankers Association (ABA) and is available online at US Department of Labor Employee Benefi ts Security Administration ldquoABC Plan 401(k) Plan Fee Disclosure Form for Services Provided by XYZ Companyrdquo (see wwwdolgovebsapdf401kfefmpdf) The Institute along with the American Benefi ts Council (ABC) ACLI ABA and the Securities Industry Association (SIA now the Securities Industry and Financial Markets Association [SIFMA]) submitted to the DOL in July 2006 a list of fee and expense data elements that plan sponsors and service providers may want to discuss when entering into service arrangements (see wwwiciorgpolicycomments06_dol_fee_com)

16 See US Department of Labor Employee Benefi ts Security Administration ldquoUnderstanding Retirement Plan Fees and Expensesrdquo See also US Department of Labor Employee Benefi ts Security Administration ldquoSelecting and Monitoring Pension ConsultantsmdashTips for Plan Fiduciariesrdquo and ldquoTips for Selecting and Monitoring Service Providers for Your Employee Benefi t Planrdquo

17 The DOL has proposed regulations that would require a service provider to provide and a plan sponsor to review detailed information on the service providerrsquos direct and indirect compensation for its services The proposal would require this information to be provided before the plan enters into a contract with the service provider and annually thereafter See 72 Fed Reg 70988 (Dec 13 2007) A report by the US Government Accountability Offi ce in November 2006 recommended DOL action in this area (see US Government Accountability Offi ce 2006)

18 See US Department of Labor Employee Benefi ts Security Administration ldquoUnderstanding Retirement Plan Fees and Expensesrdquo and ldquoA Look at 401(k) Plan Feesrdquo See also US Securities and Exchange Commission ldquoCalculating Mutual Fund Fees and Expensesrdquo

19 Plan sponsors use a variety of arrangements to obtain services for their 401(k) plans When multiple service providers are used it is an ldquounbundledrdquo arrangement and the expenses of each provider (eg trustee recordkeeper communications fi rm investment manager) are charged separately to the plan Alternatively the plan sponsor can select one provider that provides a number of services (sometimes referred to as a ldquobundledrdquo arrangement) The single provider interacts with the plan and then pays for the other bundled services out of the fees it collects from the plan Some plans use a combination of these approaches such as selecting a single provider for administrativeparticipant services and one or more providers for investment options In this case the administrative expenses can be included in the fees collected by the investment products rather than a separate charge being added In the case of mutual funds fees can be netted from fund assets to compensate the service provider for the services it provides to the fund

20 Department of Labor Opinion Letters 97-03A (January 23 1997) and 2001-01A (January 18 2001)

21 For the most part 401(k) plan assets are held in individual accounts established for each participant However the costs of running a 401(k) plan also may be partly defrayed through employee ldquoforfeituresrdquo Employees who terminate employment without fully vesting (that is earning full ownership of account assets) forfeit matching or other employer contributions (participants are always 100 percent vested in their own contributions) These forfeitures are typically used to offset fees or pay for additional employer contributions Deloitte Consulting LLP International Foundation and the International Society of Certifi ed Employee Benefi t Specialists 2008 reports that 71 percent of plans that had matching contributions used those matching contribution forfeitures to reduce employer contributions 27 percent used these funds to offset fees 11 percent reallocated the forfeitures to participants and 10 percent did something else (ldquootherrdquo) Profi t Sharing401k Council of America 2008 reports that 75 percent of 401(k) plans allocate forfeitures to reduce company contributions 16 percent of 401(k) plans allocate the forfeitures among participants (based on account balances 6 percent based on participant contributions 2 percent or based on participantrsquos share of company contributions 8 percent) 6 percent of plans applied forfeitures to reduce plan expenses and 3 percent of plans did something else (ldquootherrdquo) The IRC and ERISA determine the maximum vesting schedule for 401(k) plans and require that employer contributions made to the 401(k) plan not be removed from the plan

In addition plans may charge fees for certain transactions such as taking a loan or making a withdrawal and participants typically pay those fees in full when engaging in the specifi c activity

22 See Deloitte Consulting LLP and Investment Company Institute 2009a and 2009b for full results from the survey

23 For the regression analysis of the fee data see Deloitte Consulting LLP and Investment Company Institute 2009b

24 For example plan sponsors that also had a defi ned benefi t plan or health and welfare plan with their DC plan retirement service provider tended to have a lower ldquoall-inrdquo fee Leveraging an existing relationship could reduce start-up and ongoing costs for example if the service provider already works with payroll data for another purpose See Deloitte LLP and Investment Company Institute 2009a and 2009b

25 Generally when more of the plan costs are subsidized by the employer the costs paid by plan participants are lower Consider for example the variety of ways the costs of administrative services are paid Deloitte Consulting LLP International Foundation and the International Society of Certifi ed Employee Benefi t Specialists 2008 reports that 26 percent of 436 401(k) plan sponsors surveyed indicated that the company (plan sponsor) paid for all administrative and recordkeeping expenses (see Figure A1 in the appendix) In contrast 61 percent of plans surveyed indicated participants pay for recordkeeping and administrative services 10 percent of plans charged participants directly and 51 percent of plans indicated participants pay through


fees and expenses included in the particular investment products For example in the case of mutual funds these costs are included in the fundrsquos total expense ratio (as they are for all mutual fund investors) Similarly insurance fees or fees associated with other pooled investments are paid by participants as part of the cost of those investments

26 In addition Profi t Sharing401k Council of America 2008 reports that 49 percent of plan sponsors surveyed paid the plan recordkeeping expenses participants paid for recordkeeping in 40 percent of plans and 11 percent of plans indicated both the plan sponsor and participants shared the costs of recordkeeping

27 The DOL provides information to help employees learn about fees associated with their 401(k) plans See US Department of Labor Employee Benefi ts Security Administration ldquoA Look at 401(k) Plan Feesrdquo The SEC also provides investor education at wwwsecgovinvestorshtml Plans designed to meet the requirements of Section 404(c) of ERISA (see endnote 10) are required to provide to participants either directly or upon request a description of the annual operating expenses which reduce the rate of return and the aggregate amount of those expenses expressed as a percentage of average net assets for each available investment option In addition participants must receive a prospectus for any investment alternative such as a mutual fund that is subject to the Securities Act of 1933 (Department of Labor Reg sect 2550404c-1(b)(2)(i)(B)) The disclosure requirements would change somewhat under a DOL proposal Under the proposal all participant-directed plans would provide participants upon enrollment fee and other investment information for each investment option available in the plan For collective investment productsmdashsuch as mutual funds bank collective trusts and insurance company separate accountsmdashannual fees would be disclosed as a total expense ratio See 73 Fed Reg 43014 (July 23 2008) The US Government Accountability Offi ce 2006 suggested Congress consider amending ERISA to require plan sponsors to disclose fee information of 401(k) investment options to participants in a way that facilitates comparison among the options A number of bills introduced in Congress would create new requirements for plans to disclose fee and other information to participants

28 GICs are insurance company products that promise a specifi c rate of return on invested capital over the life of a contract A similar investment option is a synthetic GIC which consists of a portfolio of fi xed-income securities ldquowrappedrdquo with a guarantee (typically by an insurance company or bank) to provide benefi t payments according to the terms of the plan at book value For additional discussion of these investment options and 401(k) plan participantsrsquo asset allocations see Holden et al 2008 and Holden VanDerhei and Alonso 2009

29 Company stock is the stock of the plan sponsor (employer) See Holden et al 2008 for additional discussion of 401(k) participant investment in company stock in 401(k) plans

30 Profi t Sharing401k Council of America 2008 indicates that 156 percent of 401(k) plans offer a self-directed brokerage window for participant contributions 53 percent of plans offer a mutual fund window

31 For additional information on mutual funds and the US retirement market see Investment Company Institute 2009b and Brady Holden and Short 2009a

32 See Investment Company Institute 2004 2005 and 2009a and Reid and Rea 2003

33 See Investment Company Institute 2009b and Brady Holden and Short 2009a and 2009b

34 Additional servicing fees not refl ected in the mutual fund total expense ratios are not captured in this analysis nor is the cost of holding other types of investments in 401(k) plans See Deloitte Consulting LLP and Investment Company Institute 2009a for a survey of 130 plans that explores the factors that impact 401(k) plan fees

35 Financial advisers retirement plan recordkeepers discount brokerages and other fi nancial intermediaries provide an array of important and valuable services to mutual fund shareholders In the context of 401(k) plans these services can include recordkeeping transaction processing participant communication education and advice and regulatory and compliance services (Figure 2) Mutual funds and their investment advisers use a variety of arrangements to compensate plan service providers for these services Under one arrangement a mutual fundrsquos board of directors may adopt a plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 As explained in US Securities and Exchange Commission ldquoMutual Fund Fees and Expensesrdquo Rule 12b-1 allows mutual funds to use fund assets to cover distribution expenses and shareholder service expenses ldquoDistribution feesrdquo include fees paid for marketing and selling fund shares such as compensating brokers and others who sell fund shares and paying for advertising the printing and mailing of prospectuses to new investors and the printing and mailing of sales literature Under Financial Industry Regulatory Authority (FINRA formerly the National Association of Securities Dealers [NASD]) rules 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder services) cannot exceed 75 basis points (NASD Conduct Rule 2830(d)) ldquoShareholder servicerdquo fees are fees paid to respond to investor inquiries and provide investors with information about their investments A mutual fund may pay shareholder service fees without adopting a 12b-1 plan FINRA imposes an annual 25 basis point cap on shareholder service fees (regardless of whether these fees are authorized as part of a 12b-1 plan) For more discussion of 12b-1 fees and how funds use them see Investment Company Institute 2005

At year-end 2008 69 percent of mutual fund assets held in 401(k) plans were invested in funds that had no 12b-1 fee another 21 percent of 401(k) plan mutual fund assets were invested in funds with 12b-1 fees of 025 percent or less (see Figure A6) Figures A5 through A7 in the appendix report average 12b-1 fees as well as distribution of 401(k) mutual fund assets across funds by the amount of the 12b-1 fee

Funds also may pay service providers for sub-transfer agency services or administrative services out of fund assets (this is refl ected in the fundrsquos total expense ratio in the ldquoOther Expenserdquo category) Under another type of arrangement the fundrsquos adviser (or a related entity) compensates the service provider(s) out of the profi ts earned from the advisory fee collected from the fund


36 In 2008 28 percent of mutual funds holding 19 percent of

assets were stand-alone funds 72 percent of funds holding

81 percent of assets were multiclass funds At year-end 2008

there were more than 8000 funds with total assets of

$9601 billion See Investment Company Institute 2009a

37 See Figure A2 in the appendix for additional detail and historical data In addition see Figure A3 in the appendix for mutual fund assets by share class by type of mutual fund (stock funds bond funds and money market funds)

38 See Reid and Rea 2003

39 Back-end-load shares which are primarily Class B shares typically have an annual 12b-1 fee of 100 basis points and a CDSL set at 5 percent in the fi rst year the shares are held then the CDSL falls in units of 1 percentage point per year reaching 0 percent in the sixth or seventh year in which the shares are held Back-end-load shares that are transferred or exchanged within a fund family are not subject to the CDSL Generally after six to eight years Class B shares convert to Class A shares which lowers the level of the 12b-1 fee from 100 basis points to that of Class A shares For additional details see Investment Company Institute 2009a and Reid and Rea 2003

40 Level-load shares which include Class C shares typically have an annual 12b-1 fee of 100 basis points and a CDSL set at 1 percent in the fi rst year the shares are held After the fi rst year no CDSL is charged on redemptions These shares usually do not convert to Class A shares For additional details see Investment Company Institute 2009a and Reid and Rea 2003

41 Retirement share classes can be load or no-load depending on the level of the 12b-1 fee and presence of a load or CDSL

42 Stock mutual funds include domestic stock funds (44 percent of total 401(k) mutual fund assets at year-end 2008) foreign stock funds (14 percent) and hybrid funds (20 percent) Lifestyle and lifecycle funds are generally included in the hybrid fund category See Investment Company Institute 2009b and Brady Holden and Short 2009a for details

43 Expense information is not available for mutual funds held as investment choices in variable annuities (often referred to as VA mutual funds)

44 For a more detailed discussion of competition in the mutual fund industry see Coates and Hubbard 2006 Stevens 2006 Reid 2006 and Investment Company Institute 2009a

45 In February 2006 ICI conducted an in-home survey of 737 randomly selected fund owners who had purchased shares of stock bond or hybrid mutual funds outside workplace retirement plans in the preceding fi ve years (see Investment Company Institute 2006) On average recent mutual fund investors considered nine distinct items of information about a fund before purchasing shares fi ve of which they considered ldquovery importantrdquo to making the fi nal decision to invest in a fund Seventy-four percent of recent fund investors wanted to know about a fundrsquos fees and expenses before purchasing shares 69 percent reviewed or asked questions about the fundrsquos historical performance

46 For example see Investment Company Institute 2009a and Collins 2005

47 Profi t Sharing401k Council of America 2008 indicates that 60 percent of plans monitor plan investments on a quarterly basis 22 percent annually 13 percent semiannually 4 percent monthly and 1 percent at some other frequency (in 2007) Deloitte Consulting LLP International Foundation and the International Society of Certifi ed Employee Benefi t Specialists 2008 reports that 60 percent of the plans they surveyed evaluated and benchmarked the performance of plan investments on a quarterly basis 20 percent annually 15 percent semiannually 3 percent on no formal schedule and 2 percent at some other frequency (in 2007)

48 Deloitte Consulting LLP International Foundation and the International Society of Certifi ed Employee Benefi t Specialists 2008 fi nds that 40 percent of plans had replaced a fund due to poor performance within the last year 24 percent had replaced a fund one year to less than two years ago 15 percent had replaced a fund two years to less than fi ve years ago 4 percent had last replaced a fund fi ve or more years ago and 17 percent had never replaced a fund

49 The size of the plan in terms of assets and participants and the average account balance are key factors in the pricing of services

50 Schrass 2008 reports that among mutual fund shareholders owning funds outside of DC plans 80 percent owned fund shares through professional fi nancial advisers in 2007 Financial advisers provide a range of services to investors they generally help investors to identify fi nancial goals and recommend funds to meet those goals conduct transactions maintain fi nancial records and coordinate the distribution of prospectuses fi nancial reports and proxy statements (see Leonard-Chambers and Bogdan 2007)

51 For the distribution of expense ratios of mutual funds in 401(k) plans by more detailed investment objective see Figure A4 in the appendix

52 The SEC has adopted modifi cations to its prospectus rules that make the turnover rate more prominent by moving the turnover rate to the summary section at the beginning of the prospectus See 74 Fed Reg 4546 (Jan 26 2009)

53 The SEC requires that the turnover rate be calculated by dividing the lesser of purchases or sales of portfolio securities for the reporting period by the monthly average of the value of the portfolio securities owned by the fund during the same reporting period

54 For a more detailed discussion of portfolio turnover see Reid and Millar 2004

55 Although the average portfolio turnover rate experienced by stock mutual fund shareholders increased slightly in 2008 it is in line with the average experience of the past 35 years (the average of 1974ndash2008 was 58 percent) See Investment Company Institute 2009a


References

Allen Everitt T Jr Joseph J Melone Jerry S Rosenbloom and Jack L VanDerhei 1997 Pension Planning Pension Profi t-Sharing and Other Deferred Compensation Plans Eighth Edition Boston MA Irwin McGraw-Hill

Brady Peter Sarah Holden and Erin Short 2009a ldquoThe US Retirement Market 2008rdquo Investment Company Institute Fundamentals 18 no 5 (June) Available at wwwiciorgpdffm-v18n5pdf

Brady Peter Sarah Holden and Erin Short 2009b ldquoAppendix Additional Data on the US Retirement Market 2008rdquo Investment Company Institute Fundamentals 18 no 3A (June) Available at wwwiciorgpdffm-v18n5_appendixpdf

Coates John C IV and R Glenn Hubbard 2006 ldquoCompetition and Shareholder Fees in the Mutual Fund Industry Evidence and Implications for Policyrdquo AEI Working Paper no 127 (June)

Collins Sean 2005 ldquoAre SampP 500 Index Mutual Funds Commoditiesrdquo Investment Company Institute Perspective 11 no 3 (August) Available at wwwiciorgpdfper11-03pdf

Collins Sean 2009 ldquoTrends in the Fees and Expenses of Mutual Funds 2008rdquo Investment Company Institute Fundamentals 18 no 3 (April) Available at wwwiciorgpdffm-v18n3pdf

Deloitte Consulting LLP International Foundation and the International Society of Certifi ed Employee Benefi t Specialists 2008 Annual 401(k) Benchmarking Survey 2008 Edition New York NY Deloitte Consulting LLP Available at wwwiscebsorgpdf40128k29survey_08pdf

Deloitte Consulting LLP and Investment Company Institute 2009a Defi ned Contribution401(k) Fee Study Washington DC Investment Company Institute Available at wwwiciorgpdfrpt_09_dc_401k_fee_studypdf

Deloitte Consulting LLP and Investment Company Institute 2009b Appendix Regression Analysis for the DeloitteICI Defi ned Contribution401(k) Fee Study Washington DC Investment Company Institute Available at wwwiciorgpdfrpt_09_dc_401k_fee_study_apppdf

Hewitt Associates 2006 How Well Are Employees Saving and Investing in 401(k) Plans 2006 Hewitt Universe Results Lincolnshire IL Hewitt Associates LLC

Hewitt Associates 2007 Trends and Experiences in 401(k) Plans 2007 Lincolnshire IL Hewitt Associates LLC

Holden Sarah Peter Brady and Michael Hadley 2006 ldquo401(k) Plans A 25-Year Retrospectiverdquo Investment Company Institute Perspective 12 no 2 (November) Available at wwwiciorgpdfper12-02pdf

Holden Sarah Jack VanDerhei and Luis Alonso 2009 ldquoWhat Does Consistent Participation in 401(k) Plans Generaterdquo Investment Company Institute Perspective 15 no 1 and EBRI Issue Brief no 332-SR (July) Washington DC Investment Company Institute and Employee Benefi t Research Institute Available at wwwiciorgpdfper15-01pdf and wwwebriorgpdfbriefspdfEBRI_IB_7-2009_No332-SR_ConsistPartpdf

Holden Sarah Jack VanDerhei Luis Alonso and Craig Copeland 2008 ldquo401(k) Plan Asset Allocation Account Balances and Loan Activity in 2007rdquo Investment Company Institute Perspective 14 no 3 and EBRI Issue Brief no 324 (December) Washington DC Investment Company Institute and Employee Benefi t Research Institute Available at wwwiciorgpdfper14-03pdf and wwwebriorgpdfbriefspdfEBRI_IB_12a-2008pdf

Investment Company Institute 2004 ldquoThe Cost of Buying and Owning Mutual Fundsrdquo Investment Company Institute Fundamentals 13 no 1 (February) Available at wwwiciorgpdffm-v13n1pdf

Investment Company Institute 2005 ldquoHow Mutual Funds Use 12b-1 Feesrdquo Investment Company Institute Fundamentals 14 no 2 (February) Available at wwwiciorgpdffm-v14n2pdf

Investment Company Institute 2006 Understanding Investor Preferences for Mutual Fund Information Washington DC Investment Company Institute Available at wwwiciorgpdfrpt_06_inv_prefs_fullpdf

Investment Company Institute 2009a 2009 Investment Company Fact Book A Review of Trends and Activity in the Investment Company Industry Washington DC Investment Company Institute Available at wwwicifactbookorg

Investment Company Institute 2009b ldquoThe US Retirement Market First Quarter 2009rdquo Investment Company Institute Fundamentals 18 no 5-Q1 (August) Available at wwwiciorgpdf09_q1_retmrkt_updatepdf

Leonard-Chambers Victoria and Michael Bogdan 2007 ldquoWhy Do Mutual Fund Investors Use Professional Financial Advisersrdquo Investment Company Institute Fundamentals 16 no 1 (April) Available at wwwiciorgpdffm-v15n1pdf

Profi t Sharing401k Council of America 2008 51st Annual Survey of Profi t Sharing and 401(k) Plans Refl ecting 2007 Plan Experience Chicago IL Profi t Sharing401(k) Council of America

Reid Brian 2006 ldquoCompetition in the Mutual Fund Businessrdquo Investment Company Institute Research Commentary (January) Available at wwwiciorgpdfrc_competitionpdf

Reid Brian and Kimberlee Millar 2004 ldquoMutual Funds and Portfolio Turnoverrdquo Investment Company Institute Research Commentary (November) Available at wwwiciorgpdfrc_v1n2pdf


Reid Brian K and John D Rea 2003 ldquoMutual Fund Distribution Channels and Distribution Costsrdquo Investment Company Institute Perspective 9 no 3 (July) Available at wwwiciorgpdfper09-03pdf

Schrass Daniel 2008 ldquoOwnership of Mutual Funds Through Professional Financial Advisers 2007rdquo Investment Company Institute Fundamentals 17 no 4 (September) Available at wwwiciorgpdffm-v17n4pdf

Stevens Paul Schott 2006 ldquoThe Success of Americarsquos Mutual Fund Marketplace Benefi ting Fund Investorsrdquo Presentation at AEIBrookings Forum Washington DC (March 15) Available at wwwiciorgpolicyregulationproductsmutual06_aei_stevens_remarks

US Department of Labor Bureau of Labor Statistics 2007 National Compensation Survey Employee Benefi ts in Private Industry in the United States March 2007 Washington DC US Department of Labor Bureau of Labor Statistics Available at wwwblsgovncsebsspebsm0006pdf

US Department of Labor Bureau of Labor Statistics 2008a National Compensation Survey Employee Benefi ts in Private Industry in the United States March 2008 Washington DC US Department of Labor Bureau of Labor Statistics Available at wwwblsgovncsebsbenefi ts2008ownershipprivatetable02apdf

US Department of Labor Bureau of Labor Statistics 2008b ldquoEmployee Benefi ts in the United States March 2008rdquo News release August 7 2008 Available at wwwblsgovnewsreleasepdfebs2pdf

US Department of Labor Pension and Welfare Benefi ts Administration (now Employee Benefi ts Security Administration) 1993 Private Pension Plan Bulletin Abstract of 1990 Form 5500 Annual Reports no 2 (Summer) Washington DC US Department of Labor

US Department of Labor Pension and Welfare Benefi ts Administration (now Employee Benefi ts Security Administration) 1999 Private Pension Plan Bulletin Abstract of 1995 Form 5500 Annual Reports no 8 (Spring) Washington DC US Department of Labor Available at wwwdolgovebsapublicationsbullet1995introhtm

US Department of Labor Pension and Welfare Benefi ts Administration (now Employee Benefi ts Security Administration) 2004 Private Pension Plan Bulletin Abstract of 1999 Form 5500 Annual Reports no 12 (Summer) Washington DC US Department of Labor Available at wwwdolgovebsapdf1999pensionplanbulletinpdf

US Department of Labor Employee Benefi ts Security Administration 2005 PRELIMINARY Private Pension Plan Bulletin Abstract of 2000 Form 5500 Annual Reports Washington DC US Department of Labor (July) Available at wwwdolgovebsapdf2000pensionplanbulletinpdf

US Department of Labor Employee Benefi ts Security Administration 2008a Private Pension Plan Bulletin Abstract of 2005 Form 5500 Annual Reports Washington DC US Department of Labor (February) Available at wwwdolgovebsapdf2005pensionplanbulletinpdf

US Department of Labor Employee Benefi ts Security Administration 2008b Private Pension Plan Bulletin Historical Tables Washington DC US Department of Labor (February) Available at wwwdolgovebsapdfprivatepensionplanbulletinhistoricaltablespdf

US Department of Labor Employee Benefi ts Security Administration 2008c Private Pension Plan Bulletin Abstract of 2006 Form 5500 Annual Reports Washington DC US Department of Labor (December) Available at wwwdolgovebsapdf2006pensionplanbulletinpdf

US Department of Labor Employee Benefi ts Security Administration ldquoABC Plan 401(k) Fee Disclosure Form for Services Provided by XYZ Companyrdquo Available at wwwdolgovebsapdf401kfefmpdf

US Department of Labor Employee Benefi ts Security Administration ldquoA Look at 401(k) Plan Feesrdquo Available at wwwdolgovebsapublications401k_employeehtml

US Department of Labor Employee Benefi ts Security Administration ldquoSelecting and Monitoring Pension ConsultantsmdashTips for Plan Fiduciariesrdquo Available at wwwdolgovebsanewsroomfs053105html

US Department of Labor Employee Benefi ts Security Administration ldquoTips for Selecting and Monitoring Service Providers for Your Employee Benefi t Planrdquo Available at wwwdolgovebsanewsroomfs052505html

US Department of Labor Employee Benefi ts Security Administration ldquoUnderstanding Retirement Plan Fees and Expensesrdquo Available at wwwdolgovebsapublicationsundrstndgrtrmnthtml

US Government Accountability Offi ce 2006 ldquoPrivate Pensions Changes Needed to Provide 401(k) Plan Participants and the Department of Labor Better Information on Feesrdquo GAO Report no 07-21 (November) Washington DC US Government Accountability Offi ce Available at wwwgaogovnewitemsd0721pdf

US Securities and Exchange Commission ldquoCalculating Mutual Fund Fees and Expensesrdquo available at wwwsecgovinvestortoolsmfccmfcc-inthtm

US Securities and Exchange Commission ldquoMutual Fund Fees and Expensesrdquo available at wwwsecgovanswersmffeeshtm


Appendix

Figure A1

Who Pays Annual 401(k) RecordkeepingAdministrative Fees

Percentage of plans surveyed1 2007

Percent

Plan sponsor 26

Participant 61

Via investment product fees and expenses2 46

Via additional reduction to investment returns2 5

Via direct charge 10

Pro rata based on account balances 5

Equal dollar to all participants 5

Direct fees paid by both plan sponsor and participants 4

Other 9

1The survey covers 436 401(k) plan sponsors 2 Although reported separately in this survey these two components are generally combined and included in the fees and expenses of the investment option

Sources Investent Company Institute tabulation of data from Deloitte Consulting LLP International Foundation and the International Society of Certif ied Employee Benef it Specialists 401(k) Benchmarking Survey 2008 Edition

Figure A2


Percentage of assets1 1996ndash2008

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1

Retirement shares () () () () () () () 1 2 3 4 5 6

Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41

Retirement shares 2 2 2 2 3 3 3 3 3 4 6 7 9

Total 100 100 100 100 100 100 100 100 100 100 100 100 100

1Components may not add to the total because of rounding2Front-end load gt 1 percent Primarily includes A shares includes assets where front-end loads are waived3Front-end load = 0 percent CDSL gt 2 percent Primarily includes B shares4Front-end load le 1 percent CDSL le 2 percent and 12b-1 fee gt 025 percent Primarily includes C shares excludes institutional share classes5All other load share classes not classif ied as front-end-load back-end-load level-load or load retirement shares6Front-end load = 0 percent CDSL = 0 percent and 12b-1 fee le 025 percent

() = less than 05 percent




Figure A3


Percentage of assets1 1996 2006 2007 and 2008

Stock funds

1996 2006 2007 2008

Load 46 27 26 25

Front-end load2 42 20 19 17

Back-end load3 3 1 1 1

Level load4 1 1 1 1

Retirement shares () 4 5 7

Other load5 () () () ()

No-load6 54 73 74 75

Institutional 9 15 16 18

Retail 43 52 50 45

Retirement shares 2 6 8 11

Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14


Back-end load3 6 1 1 ()

Level load4 1 1 1 1


Other load5 2 () () ()

No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4

Front-end load2 () () () ()

Back-end load3 () () () ()

Level load4 () 2 1 1


Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33


Total 100 100 100 1001Components may not add to the total because of rounding2Front-end load gt 1 percent Primarily includes A shares includes assets where front-end loads are waived3Front-end load = 0 percent CDSL gt 2 percent Primarily includes B shares4Front-end load le 1 percent CDSL le 2 percent and 12b-1 fee gt 025 percent Primarily includes C shares excludes institutional share classes5All other load share classes not classif ied as front-end-load back-end-load level-load or load retirement shares6Front-end load = 0 percent CDSL = 0 percent and 12b-1 fee le 025 percent



Sources Calculated based on data from the Investment Company Institute Lipper Value Line Publishing Inc CDAWiesenberger InvestmentCompanies Service Survivor-Bias-Free US Mutual Fund Database copy2009 Center for Research in Security Prices (CRSPreg) The University ofChicago Booth School of Business Primary Datasource and Strategic Insight Simfund


Figure A4

401(k) Mutual Fund Assets by Investment Objective and Total Expense Ratio

Percentage of assets1 2008

Total expense ratio2

lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2

Stock funds 28 49 21 3

Domestic stock 33 49 16 2

Foreign stock 8 42 44 5

Hybrid 27 61 10 2

Bond funds 56 39 5 1

High yield and world bond 5 72 19 4

Other bond 60 36 3 1

Money market funds 80 17 3 ()

1Row percentages may not add to 100 percent because of rounding 2The total expense ratio which is reported as a percentage of fund assets includes fund operating expenses and 12b-1 fee





Figure A5

401(k) Mutual Fund Investors Tend to Pay Lower-Than-Average 12b-1 Fees


1The industry average 12b-1 fee is measured as an asset-weighted average2The 401(k) average 12b-1 fee is measured as a 401(k) asset-weighted average

Note Figures exclude mutual funds available as investment choices in variable annuities and tax-exempt mutual funds Figures include mutual funds without 12b-1 fees


000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds

Industry average 12b-1 ratio1

401(k) average 12b-1 ratio2

Industry simple average 12b-1 ratio

032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004


The ICI Research Department maintains a comprehensive program of research and statistical data collections on investment companies and their shareholders The Research staff collects and disseminates industry statistics and conducts research studies relating to issues of public policy economic and market developments and shareholder demographics

For a current list of ICI research and statistics visit the Institutersquos public website at wwwiciorgresearch For more information on this issue of Fundamentals contact ICIrsquos Research Department at 202326-5913

Copyright copy 2009 by the Investment Company Institute

The Investment Company Institute (ICI) is the national association of US investment companies ICI seeks to encourage adherence to high ethical standards promote public understanding and otherwise advance the interests of funds their shareholders directors and advisers

Figure A6

401(k) Stock Fund Assets by 12b-1 Fee

Percentage of 401(k) stock mutual fund assets1 2008

gt075 to 100gt050 to 075gt025 to 050gt0 to 025Zero

69

12b-1 fee2

21

72 2

1Percentages do not add to 100 percent because of rounding2The 12b-1 fee is reported as a percentage of mutual fund assets

Note Figures exclude mutual funds available as investment choices in variable annuities Stock mutual funds include hybrid funds


Figure A7

401(k) Mutual Fund Assets by Investment Objective and 12b-1 Fee


12b-1 fee2

Zero gt0 to 025 gt025 to 050 gt050 to 075 gt075 to 100

Total 71 20 6 2 1

Stock funds 69 21 7 2 2

Domestic stock 71 19 7 1 2

Foreign stock 60 27 9 3 1

Hybrid 73 16 7 2 2

Bond funds 70 24 4 1 1

High yield and world bond 58 25 12 3 3

Other bond 71 24 3 1 1

Money market funds 86 10 2 2 ()

1Row percentages may not add to 100 percent because of rounding2The 12b-1 fee is reported as a percentage of mutual fund assets




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Bicubic GrayImageResolution 300 GrayImageDepth -1 GrayImageMinDownsampleDepth 2 GrayImageDownsampleThreshold 150000 EncodeGrayImages true GrayImageFilter DCTEncode AutoFilterGrayImages true GrayImageAutoFilterStrategy JPEG GrayACSImageDict ltlt QFactor 015 HSamples [1 1 1 1] VSamples [1 1 1 1] gtgt GrayImageDict ltlt QFactor 015 HSamples [1 1 1 1] VSamples [1 1 1 1] gtgt JPEG2000GrayACSImageDict ltlt TileWidth 256 TileHeight 256 Quality 30 gtgt JPEG2000GrayImageDict ltlt TileWidth 256 TileHeight 256 Quality 30 gtgt AntiAliasMonoImages false CropMonoImages true MonoImageMinResolution 1200 MonoImageMinResolutionPolicy OK DownsampleMonoImages true MonoImageDownsampleType Bicubic MonoImageResolution 1200 MonoImageDepth -1 MonoImageDownsampleThreshold 150000 EncodeMonoImages true MonoImageFilter CCITTFaxEncode MonoImageDict ltlt K -1 gtgt AllowPSXObjects false CheckCompliance [ None ] PDFX1aCheck false PDFX3Check false PDFXCompliantPDFOnly false PDFXNoTrimBoxError true PDFXTrimBoxToMediaBoxOffset [ 000000 000000 000000 000000 ] PDFXSetBleedBoxToMediaBox true PDFXBleedBoxToTrimBoxOffset [ 000000 000000 000000 000000 ] PDFXOutputIntentProfile () PDFXOutputConditionIdentifier () PDFXOutputCondition () PDFXRegistryName () PDFXTrapped False CreateJDFFile false Description ltlt ARA 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 BGR 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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt CZE 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 DAN ltFEFF004200720075006700200069006e0064007300740069006c006c0069006e006700650072006e0065002000740069006c0020006100740020006f007000720065007400740065002000410064006f006200650020005000440046002d0064006f006b0075006d0065006e007400650072002c0020006400650072002000620065006400730074002000650067006e006500720020007300690067002000740069006c002000700072006500700072006500730073002d007500640073006b007200690076006e0069006e00670020006100660020006800f8006a0020006b00760061006c0069007400650074002e0020004400650020006f007000720065007400740065006400650020005000440046002d0064006f006b0075006d0065006e0074006500720020006b0061006e002000e50062006e00650073002000690020004100630072006f00620061007400200065006c006c006500720020004100630072006f006200610074002000520065006100640065007200200035002e00300020006f00670020006e0079006500720065002egt DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB 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maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger) NOR 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 POL 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Fundamentals August 2009 Vol 18 No 6

Paying for 401(k) Plan Services

401(k) Plans Are Strictly Regulated

401(k) plans are complex to maintain and administer

and they are subject to an array of rules and regulations

that govern their operation including Section 401(k) of

the Internal Revenue Code (IRC) which serves as the

basis for their tax-favored treatment3 The Department

of the Treasury and the Internal Revenue Service

(IRS) enforce the tax code and impose numerous

requirements that plans must satisfy in order to qualify

for special tax treatment4 Furthermore the plans must

meet many statutory and regulatory requirements

under the Employee Retirement Income Security Act

of 1974 (ERISA) enforced by the Department of Labor

(DOL)

401(k) Plan Sponsors Provide Certain Services

When an employer offers a 401(k) plan to its

employees it selects an individual or group of

individuals known as plan fi duciaries5 to oversee the

administration of the 401(k) plan for the exclusive

benefi t of plan participants consistent with the terms

of the plan and ERISA The plan fi duciaries must

arrange for the provision of the many services required

to create and maintain a 401(k) plan

Table of Contents

Why Employers Offer 401(k) Plans 1

Paying for 401(k) Plan Services 2

401(k) Plans Are Strictly Regulated 2

401(k) Plan Sponsors Provide Certain Services 2

Administrative services 4

Participant-focused services 4

Regulatory and compliance services 5

Plan Sponsors Must Ensure That Service Costs Are Reasonable 5

Plan Sponsors Select Service Providersand Investment Arrangements 5

A Means to Compare The ldquoAll-Inrdquo 401(k) Plan Fee 7

A range of fees is found across 401(k) plans 7

Many factors affect the ldquoall-inrdquo fee 7

Fees Paid by Employer Plan and Participants 8

Looking at Fees and Expenses of Mutual Funds Held in 401(k) Accounts 9

Investors Pay Two Types of Mutual Fund Fees and Expenses 9

Mutual fund share classes 9

Mutual fund expenses 11

401(k) Participants Hold Low-Cost Mutual Funds 12

Stock funds 12

Bond funds 12

Money market funds 12

A range of mutual fund fees is found across 401(k) plans 12

Other Costs Incurred by Mutual Fund Investors 15

Stock fund turnover rates 15

Conclusion 16

Notes 17

References 21

Appendix 23


Figure 1


144

401(k) plan assets


385

864

1725

2396



2768

11

101

21

19

1

31

28

4

48

9

40

57

11

46

62

12

50


Active

3025

61

12

49

2008e2007e200620052000199519901985

2008e2007e2006e2005e2000199519901985

2320

62

12

50

eData are estimated

































Figure 2





































insurance rules
















chosen18









arrangements













































participants21

Figure 3









Employerplan


Recordkeeper

retirement service

provider




payment(percentage

of assets)



























both


































Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2










August 2009 Vol 18 No 6 Fundamentals

Figure 1


144

401(k) plan assets


385

864

1725

2396



2768

11

101

21

19

1

31

28

4

48

9

40

57

11

46

62

12

50


Active

3025

61

12

49

2008e2007e200620052000199519901985

2008e2007e2006e2005e2000199519901985

2320

62

12

50

eData are estimated

































Figure 2





































insurance rules
















chosen18









arrangements













































participants21

Figure 3









Employerplan


Recordkeeper

retirement service

provider




payment(percentage

of assets)



























both


































Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2








































Figure 2





































insurance rules
















chosen18









arrangements













































participants21

Figure 3









Employerplan


Recordkeeper

retirement service

provider




payment(percentage

of assets)



























both


































Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2
























insurance rules
















chosen18









arrangements













































participants21

Figure 3









Employerplan


Recordkeeper

retirement service

provider




payment(percentage

of assets)



























both


































Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2















































participants21

Figure 3









Employerplan


Recordkeeper

retirement service

provider




payment(percentage

of assets)



























both


































Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2


































both


































Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure 4



66

Participant

Employer

Plan3




lt$1 million

31

3

66

34

83

115

90

3 6

86

13

1

Plan assets

























investment expenses


Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure 5




49


Mutual funds

Bond funds12


Stock funds 78























fi nds that


cost mutual funds




























the plan


Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure 6



No-load4

79

Front-end load2

Other load3




No-load retail4

200820072006200420025200051998519965

36

42

14

44

33

42

15

45

31

33

17

46

28

33

23

43

21

22

20

51

3

18

24

21

49

6

17

25

23

47

7

14

16

29

41

9

60





















































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2




































assets (Figure 6)








the total)






























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2























funds (Figure 8)


















performance48













these plans





































Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure 7



00

01

02

03

04

05

06

07

08

09

10

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

00

02

04

06

08

10

12

14

16

18

200820072006200520042003200220012000199919981997

Stock funds

098

078096

074

094

074

098

076

099

079

100081

099082

095079

090076

Bond funds

Money market funds




144153

106113

064

088075

085

090072

089072

084067

080066

078063

075060

076060

074059

071058

068056

066055

051 047 050 047 050045 049047 047 046 045 047 043045 042 043 045042 043041

061

039039

073084

072

063052

038037





Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure 9



28

49

21

3

Total expense ratio

ge150100 to lt150050 to lt100lt050




Figure 8


Percent 1996 2006 2007 and 2008

1996 2006 2007 2008


Stock funds 084 102 075 088 073 085 072 084

Domestic stock 082 097 070 084 068 080 067 080

Foreign stock 114 132 097 106 092 100 091 099

Hybrid 079 095 065 081 062 078 063 079

Bond funds 071 093 056 068 055 066 052 063


Other bond 064 082 053 061 051 060 049 058





















Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure 10



0

20

40

60

80

100

120

20082007200620052004200320022001

7165 61 55 52 49 45 42 47 44

89 87

116103

110




86

47 46

95

5145

104

5950








































Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Conclusion


































Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2
















Notes







































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2
































































References















































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2

































Appendix

Figure A1



Percent

Plan sponsor 26

Participant 61







Other 9



Figure A2



1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Load 40 39 37 37 35 33 31 25 26 25 24 23 21

Front-end load2 36 36 33 33 31 30 28 22 21 20 18 17 14

Back-end load3 3 3 3 3 2 2 2 2 1 1 1 1 ()

Level load4 1 () 1 1 1 1 1 1 1 1 1 1 1


Other load5 () () () () () () () () () () () () ()

No-load6 60 61 63 63 65 67 69 75 74 75 76 77 79

Institutional 14 14 15 15 17 20 23 21 20 20 21 23 29

Retail 44 45 45 46 46 44 43 51 51 50 49 47 41


Total 100 100 100 100 100 100 100 100 100 100 100 100 100






Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure A3



Stock funds

1996 2006 2007 2008

Load 46 27 26 25



Level load4 1 1 1 1


Other load5 () () () ()

No-load6 54 73 74 75


Retail 43 52 50 45


Total 100 100 100 100

Bond funds

1996 2006 2007 2008

Load 34 17 16 14



Level load4 1 1 1 1



No-load6 66 83 84 86


Retail 44 32 30 30


Total 100 100 100 100

Money market funds

1996 2006 2007 2008

Load 1 4 4 4





Other load5 () () () ()

No-load6 99 96 96 96


Retail 50 35 33 33







Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure A4




lt050 050 to lt100 100 to lt150 gt150

Total 39 43 16 2




Hybrid 27 61 10 2










Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2











Figure A5






000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

000

005

010

015

020

025

030

035

040

045

050

200820072006200520042003200220012000199919981997

Stock funds

Bond funds

Money market funds




032

012

019

010

020

010

021

010

023

010

022

010

022

010

021

011

020

011

019

011

018

011

017

011

038

016011

023

013

023

013

021

013018

012

018

011

018

011

017

011016

011014

011013

010

035

013009

006003

006004 004006 007006 007006006 006 005 005 005 005 005 006 005 005

018

005 004

036

018

011

005004






Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2















Figure A6




69

12b-1 fee2

21

72 2




Figure A7



12b-1 fee2


Total 71 20 6 2 1




Hybrid 73 16 7 2 2










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