Important Information about Your Investment Options, Fees, and Other Expenses for the CNA 401(k) Plus Plan 2018 Annual Fee Disclosure Statement

Transcription

1 Important Information about Your Investment Options, Fees, and Other for the CNA 401(k) Plus Plan 2018 Fee Disclosure Statement The CNA 401(k) Plus Plan, the Plan, is a great way to build savings for your future. Through the 401(k) Plus Plan you get: The convenience of automatic savings through payroll deductions and the opportunity for tax advantages through beforetax and Roth 401(k) contributions Contributions from CNA that match a portion of your savings A flexible, comprehensive investment lineup that is monitored by the Plan s Investment Committee and includes options that are only available to large, institutional investors You ll want to make sure you are taking full advantage of the Plan by choosing a savings rate and investments in the Plan to meet your longterm retirement needs. Use the tools available on the Plan s website to explore how your savings and investment decisions impact your longterm savings goals. Review this statement to learn more about fees and expenses, the Plan s investment options, and where to go for more information or to take action. To learn more about the Plan, please see the Summary Plan Description available on the Plan s website. For more information about this statement, you may contact the CNA Benefits Center at or the plan administrator: CNA Benefits Center P.O. Box 1420 Lincolnshire, IL About Fees and As with other investments, many fees and expenses for the Plan are paid by investors; in this case, participants in the Plan. There are several types of fees: What s Inside Some fees are assetbased fees. You won t see these fees directly because they are charged to Plan investment options and reduce your investment earnings. These fees are included in the shown in Section 3 of this statement. Assetbased fees are utilized to pay for investment management fees. 1. About Fees and 2. The Plan s Investment Options 3. InvestmentRelated Information 4. Terms You Should Know You also have administrative fees that result in a separate fee being charged to your Plan account and individual fees that result in charges due to activity you have requested. (See the next page to learn more about administrative and individual fees.) When you decide to invest in any of the funds in the Plan, there are no upfront sales loads or charges. However, a few of the Plan s investment options have redemption fees that apply if you move money out of these funds before a minimum period of time or holding period. (Section 3 identifies any redemption fees that apply to the Plan s investment options.) Last updated 3/28/2018

2 Administrative and Individual Fees in the 401(k) Plus Plan Administrative fees: The Plan is charged fees for plan services such as recordkeeping services. As a participant, you are charged $4.08 per month to cover these costs. Online advice fees: There is an annual program fee of $6.75 for the investment advice services which is assessed quarterly. This fee is waived each quarter for Plan participants that are enrolled in Professional Management Account Services. Professional Management Account Service fees: If you enroll in Professional Management Account Services, you will be charged a fee that is based on the size of your account: First $100, % of assets Next $150, % of assets Above $250, % of assets The fee is calculated based on the average amount of assets under management for the calendar quarter, and is debited from your Plan account at the start of the following quarter. Loan fees: You will pay a $50 fee whenever you take a loan from the Plan. This fee is taken out of your loan proceeds. Learn more about applicable plan fees on the Plan s website. Fees and expenses are important because they can substantially reduce the growth of your account over the long term. (You can find answers to some common questions about the fees and expenses that may be paid by your 401(k) plan on the Department of Labor s website, But, fees are still only one of several factors to consider when making investment decisions. You also should carefully consider other key factors, including asset class and investment risk, investment objectives, principal investment strategies, and historical performance when selecting investment options. 2. The Plan s Investment Options As a participant in the Plan, you re responsible for investing your account in one or any combination of the plan s investment options. Section 3 provides more specific information about the investment options, which include: Target Retirement Date Funds These are professionally managed accounts that automatically adjust their asset allocation based on a projected retirement date. These funds are diversified and become more conservative over time. Core Funds These cover the primary asset classes and offer a wide range of risk and return characteristics providing you the flexibility to build a portfolio using funds that best fit your time horizon, risk tolerance and investment goals. You may change your investment elections as often as you like. But keep in mind that some funds are subject to trading restrictions. If trading restrictions apply, they will be listed in Section 3. Choosing Your Investment Strategy Ultimately, how you invest should depend on your age, lifestyle, accumulated wealth, years to retirement, and comfort level around risk. This statement only provides some information about your investment choices like fees, expenses, and historical returns. Your decisions should be based on the full picture, taking into account your individual situation, not just the information in this statement. To Learn More About the Investment Funds. To learn more about the investment funds offered and fees that apply to these funds, visit the Plan s website. You can find fund facts, fund investment goals and strategies, portfolio turnover rates, more current fund performance, and other fund information. You can also receive more information about the funds, including paper copies of the information that is provided online, by requesting them through the Plan Information page of the Plan s website, by writing to the CNA Benefits Center at the address given on page 1, or by calling the CNA Benefits Center at Representatives are available from 8:00 a.m. to 6:00 p.m., Central Time, Monday through Friday. Last updated 3/28/2018 Plan website: 2

3 Some of the information you can find on the website or request copies of includes: Copies of summary prospectuses for funds that are registered with the US Securities and Exchange Commission, or similar documents for funds that are not federally registered. Copies of any financial statements or reports, such as statements of additional information and shareholder reports, and of any other similar materials relating to the Plan s funds, to the extent such materials are provided to the Plan. A statement of the value of a share or unit of each fund as well as the date of the valuation. A list of the plan assets comprising the portfolio of each fund To Enroll or Make Changes to Your Investments. You can enroll in the Plan or make changes to your investments at any time by logging on to the Plan s website. Once you have logged on you can: Enroll simply go to Savings and Retirement > Contributions > Start Saving Change your current investment mix or your investment elections for future contributions go to Savings and Retirement > 401(k) Savings Plan > Investments > Change Investments and follow the instructions on the website To help you create an investment strategy, CNA has designated Alight Financial Advisors (AFA), an independent Registered Investment Advisor, to provide fiduciary investment services to plan participants. An Online Advice tool can help you finetune your investing strategy, and the Professional Management program offers personalized portfolio management from professional investment advisors. Fees apply for the Professional Management Account Services program and Online Advice; see the Administrative and Individual Fees in the 401(k) Plus Plan box in Section 1. Note AFA has hired Financial Engines Advisors L.L.C. (FEA) to provide subadvisory services. AFA is a federally registered investment advisor. FEA is a federally registered investment advisor and is an independent company that is not affiliated with AFA. Neither AFA nor FEA guarantees future results. If you are unable to log on to the Plan s website you may also enroll or change investment options by calling the CNA Benefits Center at Representatives are available from 8:00 a.m. to 6:00 p.m., Central Time, Monday through Friday. Important: The Plan s website link called Your Benefits Resources (found on INSIDE CNA under Human Resources > Benefits and Wellness > General Benefits or by logging on to and the CNA Benefits Center are resources available to you as a convenience so you can manage and monitor your account more efficiently. If you direct a change in your contribution election, it is your responsibility to make sure that all your elections are implemented after using one of these systems. You should print a written confirmation and check your paycheck to make sure the change was properly implemented. There may be periods when one or both of these systems are not available due to technical difficulties, system overloads, or routine maintenance, updating, or any other reason. Under no circumstances will the Continental Casualty Company ( CNA ) or the 401(k) Plus Plan have any responsibility or liability whatsoever for 1) the failure of any elections, given through either the Plan s website or CNA Benefits Center, to be implemented for any reason, 2) the inability of any participant to make elections through either the CNA Benefits Center or the Plan s website due to technical difficulty, systems overload, routine maintenance, or updating. Last updated 3/28/2018 Plan website: 3

4 3. InvestmentRelated Information The following table provides you with information on the investment options that have a variable rate of return. You ll find three things: 1. General information about the type of investment option 2. Fee information including assetbased fees (often called the expense ratio or Expense) 3. Historical performance for the fund and one or more appropriate benchmarks for the same period of time Keep in mind, however, that past performance does not guarantee how the investment option will perform in the future. Your investments in these options could lose money. Information about an option s principal risks is available on the Plan s website. General Information Fee Information Historical Performance Target Date Funds Fund Name/ Benchmark 1 BlackRock LifePath Index Retirement NL Fund 5 Benchmark: Dow Jones Moderately Conservative Index BlackRock Income LifePath NL Index BlackRock LifePath Index 2020 NL Fund 5 Benchmark: Dow Jones Target 2020 TR BlackRock 2020 LifePath NL Index BlackRock LifePath Index 2025 NL Fund 5 Benchmark: Dow Jones Target 2025 TR BlackRock 2025 LifePath NL Index BlackRock LifePath Index 2030 NL Fund 5 Benchmark: Dow Jones Target 2030 TR BlackRock 2030 LifePath NL Index BlackRock LifePath Index 2035 NL Fund 5 Benchmark: Dow Jones Target 2035 TR BlackRock 2035 LifePath NL Index BlackRock LifePath Index 2040 NL Fund 5 Benchmark: Dow Jones Target 2040 TR BlackRock 2040 LifePath NL Index Asset Class 2 Total 3 Per $1,000 of Investment Investment Restrictions 4 Premixed 0.09% $ % 10.91% Average Total Return as of 12/31/2017 (Fund and Benchmark) 1 yr. 5 yr. 10 yr % Premixed 0.09% $ % 9.89% 11.65% Premixed 0.09% $ % 12.02% 13.75% Premixed 0.09% $ % 14.64% 15.63% Premixed 0.09% $ % 16.99% 17.45% Premixed 0.09% $ % 18.97% 19.09% 5.29% 5.60% 5.30% 6.41% 5.52% 6.44% 7.38% 6.93% 7.38% 8.19% 8.41% 8.20% 8.96% 9.64% 8.96% 9.63% 10.60% 9.64% 4.91% 4.41% 4.91% 5.42% 5.86% 6.26% Inceptiontodate (if < 10 yrs) 7.71% 7.97% 7.78% 9.38% 8.57% 9.44% 10.33% 10.14% 10.35% 11.11% 11.63% 11.14% 11.86% 12.83% 11.86% 12.51% 13.68% 12.48% Last updated 3/28/2018 Plan website: 4

5 Fund Name/ Benchmark 1 BlackRock LifePath Index 2045 NL Fund 5 Benchmark: Dow Jones Target 2045 TR BlackRock 2045 LifePath NL Index BlackRock LifePath Index 2050 NL Fund 5 Benchmark: Dow Jones Target 2050 TR BlackRock 2050 LifePath NL Index BlackRock LifePath Index 2055 NL Fund 5 Benchmark: Dow Jones Target 2055 TR BlackRock 2055 LifePath NL Index BlackRock LifePath Index 2060 NL Fund 5 Benchmark: Dow Jones Target 2060 TR BlackRock 2060 LifePath NL Index Core Funds Northern Trust Aggregate Bond Index Fund 5 Benchmark: Barclays U.S. Aggregate Bond TR Asset Class 2 Total 3 Per $1,000 of Investment Investment Restrictions 4 Premixed 0.09% $ % 20.36% 20.14% Premixed 0.09% $ % 21.02% 20.53% Premixed 0.09% $ % 21.06% 20.53% Premixed 0.09% $ % 10.11% 20.57% Bond 0.04% $0.40 There is a 60 day purchase block Average Total Return as of 12/31/2017 (Fund and Benchmark) 1 yr. 5 yr. 10 yr. 3.45% 3.54% 10.15% 11.19% 10.16% 10.50% 11.38% 10.52% 10.72% 11.39% 10.75% 10.31% 2.01% 2.10% 6.56% 6.65% 6.66% 5.49% 4.01% Inceptiontodate (if < 10 yrs) 13.08% 14.09% 13.05% 13.52% 14.20% 13.49% 10.79% 11.17% 10.82% 9.33% 3.76% 9.33% 3.90% 4.01% Invesco Stable Value Fund 6 Benchmark: BofA 91 Day T Bill Actual + 100bp Stable Value 0.34% $ % 1.86% 1.79% 1.27% 2.93% 1.39% Prudential Core Plus Bond Fund Benchmark: Barclays U.S. Aggregate Bond TR Bond 0.13% $ % 3.54% 3.68% 2.10% 6.14% 4.01% PIMCO All Asset Fund Institutional 7 Benchmarks: Barclays US TIPS (110 Year) Inflation Sensitive 0.93% $ % 1.90% 3.67% 0.09% 5.29% 2.83% Northern Trust S&P 500 Index Fund 5 Benchmark: S&P 500 TR Vanguard Windsor II Fund Benchmark: Russell 1000 Value TR S&P 500 TR Large Cap Large Cap 0.02% $0.20 There is a 60 day purchase block 0.25% $2.50 There is a 30 day purchase block must wait 30 days before moving 21.82% 21.83% 16.87% 13.66% 21.83% 15.77% 15.79% 13.33% 14.04% 15.79% 8.49% 8.50% 7.19% 7.10% 8.50% Winslow Large Cap Growth Fund, CIT Class I 5 Benchmark: Russell 1000 Growth Index Large Cap 0.55% $ % 30.21% 15.94% 17.33% 10.00% 13.07% 14.83% Last updated 3/28/2018 Plan website: 5

6 Fund Name/ Benchmark 1 Northern Trust S&P 400 Index Fund 5 Benchmarks: S&P 400 (Mid Cap) Index Atlanta Capital Small/Mid Cap Fund 5 Benchmark: Russell 2500 TR Northern Trust Russell 2000 Index 5 Benchmark: Russell 2000 TR Northern Trust All Country World Index ExUS IMI Fund 5 Benchmarks: MSCI ACWI exus IMI NR USD Vanguard International Growth Fund Benchmarks: MSCI ACWI exus NR USD Northern Trust Emerging Market Index Fund 5 Benchmark: MSCI EM (Emerging Markets) TR US T. Rowe Price Instl Emerging Markets Benchmark: MSCI EM (Emerging Markets) TR US Asset Class 2 Mid Cap Small/Mid Cap Small Cap NonU.S. NonU.S. NonU.S. Emerging Markets Stock Fund NonU.S. Emerging Markets Stock Fund Total 3 Per $1,000 of Investment Investment Restrictions % $0.40 There is a 60 day purchase block Average Total Return as of 12/31/2017 (Fund and Benchmark) 1 yr. 5 yr. 10 yr % 16.24% 0.77% $ % 16.81% 0.04% $0.40 There is a 60 day purchase block 0.12% $1.20 There is a 60 day purchase block 0.32% $3.20 There is a 30 day purchase block must wait 30 days before moving. 0.15% $1.50 There is a 60 day purchase block 1.10% $11.00 There is a 30 day purchase block must wait 30 days before moving. There is also a 2% redemption fee for money transferred out within 30 days of being transferred in % 14.65% 27.65% 27.81% 43.16% 27.19% 36.92% 37.28% 42.87% 37.28% 14.95% 15.01% 17.44% 14.33% 14.07% 14.12% 7.29% 7.22% 11.02% 6.80% 4.12% 4.35% 6.55% 4.35% 9.89% 9.97% 13.04% 9.22% 8.71% 2.20% 4.73% 1.84% 1.68% 1.53% 1.68% Inceptiontodate (if < 10 yrs) 15.33% 15.44% 6.67% 6.92% 7.18% 7.59% 1 See the definition of Benchmark in the Glossary. Two benchmarks are included for the LifePath funds, one administered by BlackRock, which is the sponsor of the funds, and one of which is independent of BlackRock. The investment fund summary pages on the Plan s website include alternative benchmarks for some of the funds. The returns on each of these benchmarks will vary to some extent because they are based on different market indexes, so including more than one benchmark may help you evaluate how well a fund has historically performed in comparison to the market. 2 For more information about specific asset classes, see the funds website. 3 Includes investment management company fees and operating expenses paid by the fund 4 All fund managers have policies on excessive trading. Some of the funds may impose further restrictions and/or fees based on how often funds can be transferred in or out in order to limit or prevent day trading, market timing, and other practices that may impose excessive costs on the fund. For more specific information on the Market Timing Trading policies for each fund, see the fund s website. 5 In these fund options, the Plan invests in a either a separate account or collective trust that invests in essentially the same manner as the named fund. Since the separate account or collective trust has not been in existence for the full reporting period, the performance for the period prior to the creation of the separate account or collective trust is based on the performance of the named fund a similar fund/share class with longer history. The performance of the separate account or collective trust may differ slightly from that of the named fund, due principally to different fee and/or expense structures. 6 This fund option is a separate account that invests in essentially the same manner as the named fund. The separate account has not been in existence for the full reporting period. Performance attributable to the period of 6/30/2010 to 12/31/2014 is based on blended performance of assets under management by Invesco as well as Continental Assurance Company (CAC). Performance attributable to prior to 6/30/2010 is based on CAC management. 7 Effective April 1, 2018, the expense ratio reporting for the fund has been corrected to include interest expense in the amount of.06% (or $.60 per $1,000 investment) that was previously omitted from the expense ratio. Last updated 3/28/2018 Plan website: 6

7 4. Terms You Should Know For details related to investments, go to the Plan s website. You will find fund details by going to Savings and Retirement > 401(k) Savings Plan > Investments > Fund Performance, and clicking on the individual fund. Here are a few key terms and concepts to help you understand the information described in this statement. Administrative fees: Fees paid to the recordkeeper to cover expense for things like keeping data on participants, communication materials, Internet services, and assisting participants with transactions. Assetbased fees: Fees that are charged as a percent of holdings in an investment to cover investment management fees plus any assetbased administrative service fees. Assetbased fees are also referred to as the expense ratio, or, more technically, the fund s total annual operating expenses. (See box on this page for an example of how assetbased fees work.) Asset class: A specific category of assets or investments (such as stocks, bonds, or cash) as well as certain types of stocks (such as international stocks, largecap stocks, etc.). Assets within the same class generally exhibit similar characteristics. Benchmark: A benchmark is typically a market index that tracks general market performance of similar types of investments. For instance, the S&P 500 Index is commonly used as a benchmark for largecap stocks. Core Funds: Each of these funds represents a single asset class. A combination of Core Funds is needed to have a diversified portfolio that will provide the most optimal longterm investment experience. Designated Investment Advisor: This is the individual or organization that manages investments for individuals who choose to participate in managed account services. Individual fees: These fees apply to your account and generally depend on transactions in your account, like taking a loan from the Plan. Other individual fees may be charged to each participant to pay for services available to all participants, such as investment advice. Investment management fees: Fees paid to the investment manager for selecting and managing the investments in an investment option. These fees may also include costs such as advertising and promotion, administration, and other related services. Premixed funds: A premixed fund is one that invests in a mix of stocks and bonds. See Target date funds. Professional Management Account Services: You have the option to sign up for managed account services where the designated investment advisor will manage your investment mix for you. If you choose this service, the fees described in the Administrative and Individual Fees in the 401(k) Plus Plan box in Section 1 will apply. Purchase Block: This transfer restriction applies when money is moved out of a fund and then cannot be moved back into the fund for a specific period of time (usually 30 to 90 days). Target date funds: These funds are premixed, diversified investment strategies that are designed to be a single investment solution. They have a mix of underlying investments that are generally appropriate for a given retirement date. How AssetBased Fees Work Let s assume your current account balance is $30,000, and you ve invested in three funds as shown below. Here s an estimate of what you might pay annually in total assetbased fees. Investment Balance AssetBased Fees As % of Assets Dollar Amount Bond $10, % $ Small/Mid $17, % $ Cap Stock International $ 3, % $ Growth Total $30,000 $ Because assetbased fees are accumulated daily, your actual cost will vary as your account value changes. Last updated 3/28/2018 Plan website: 7