RETIREMENT PLAN PERFORMANCE REPORT CARD. Prepared for Plan Sponsors 06/30/15. Investment Data for Periods Ending June, 2015

Transcription

1 REPORT CARD RETIREMENT PLAN PERFORMANCE REPORT CARD Prepared for Plan Sponsors 06/30/15 Investment Data for Periods Ending June, 2015 For use with the SFR SM Program. The SFR SM Program is distributed by Security Distributors, Inc., a subsidiary of Security Benefit Corporation ( Security Benefit ). PlanTools Defined Contribution RISK MANAGEMENT SYSTEM

2 INTRODUCTION What is this report? This analysis of your plan s investment options compares the current funds against comparable peer groups relative to the monitoring standards as listed below. If the monitoring standards are all met, the fund is placed on the Meets All Criteria and is in compliance with the Investment Policy Statement (IPS). If exceptions to the monitoring standards are seen, then the following will be reported: Funds that fail to meet a monitoring standard will be placed on the Watch and/or the Needs Attention shown on pages 4, 5 & 6. Funds that fail to meet a monitoring standard for one to three consecutive quarters are placed on the Watch. Funds that are placed on the Watch for greater than three consecutive calendar quarters will then be flagged as Needs Attention and placed on that list. Funds that fail to meet a monitoring standard and are maintained on the Needs Attention for three consecutive quarters will be replaced with a like fund in the same investment category. Certain circumstances or market conditions may not permit a fund to be replaced with another fund in the same investment category. Fund removals, replacements and additions, if needed, will occur annually. In addition, this report identifies any funds that are exempt from the monitoring criteria. What do we monitor? Each fund is compared to a suitable peer group every quarter. The following are the data points (standards) and minimum levels of performance deemed appropriate: Code Monitoring Standard Performance Criteria a Total Return 3 Years Median or greater for peer group b Total Return 5 Years Median or greater for peer group c Risk Adjusted Return 3 Years ( Sharpe Ratio ) No less than 75% for peer group d Operating Expense Ratio No more than 75% for peer group In addition to the above monitoring standards, the funds are continually monitored for fiduciary/governance oversight, manager tenure, management changes and overall viability for the Security Benefit SFR SM Retirement Program. Based on the evaluations, funds may fall into one of the following categories: Meets All Criteria The Meets All Criteria represents funds that met all of the standards and criteria set forth above. Watch The Watch represents funds that have underperformed according to the standards and criteria set forth above. The letter(s) corresponding to the monitoring standard(s) in which underperformance was correlated for a fund can be found listed in the Watch column of the Report Card on pages 4, 5 & 6. Needs Attention The Needs Attention represents funds that have underperformed according to the standards and criteria set forth above and appeared on the Watch for greater than three consecutive calendar quarters. The letter(s) corresponding to the monitoring standard(s) in which underperformance was correlated for a fund can be found listed in the Needs Attention column of the Report Card on pages 4, 5 & 6. 2

3 FUND CATEGORIES & STYLES A Brief Explanation This analysis has been prepared using institutional quality data, tools and techniques; together with the skills of the PlanTools service team. In this work, we have partnered with Morningstar, Inc. General Observations Information used in the creation of this report has been collected from various sources we believe to be reliable. Such information relates to the condition of the plan and its investments, as well as fund performance data and related metrics. In reviewing this data, please remember that past performance is no guarantee of future results. Asset Class Categories The investment categories and management styles we use to analyze plan investment funds are those specific to the Morningstar system of tracking mutual funds and the data they generate.* Asset Class Asset Class LG Large Growth MA Moderate Allocation LB Large Blend IH World Allocation LV Large Value CA Conservative Allocation MG Mid Cap Growth EM Diversified Emerging Markets MB Mid Cap Blend MA Moderate Allocation MV Mid Cap Value WS World Stock SG Small Growth CI Intermediate-Term Bond SB Small Blend CS Short-Term Bond SV Small Value HY High Yield Bond SN Specialty Natural Resources IP Inflation-Protected Bond ST Specialty Technology IB World Bond SR Specialty Real Estate TM Money Market Taxable TL Target Date BL Bank Loan TN Target Date STA Stable Asset TK Target Date FV Foreign Large Value TJ Target Date TW Corporate Bond TI Target Date FG Foreign Large Growth TH Target-Date TG Target-Date TE Target-Date TD Target-Date TA Target-Date * We reserve the right to change the analytical tools used to prepare this analysis. 3

4 REPORT CARD CONTENT Monitoring Standards and Performance Criteria (Corresponds to the letters in the list below) Code Monitoring Standard Performance Criteria a Total Return 3 Years Median or greater for peer group b Total Return 5 Years Median or greater for peer group c Risk Adjusted Return 3 Years ( Sharpe Ratio ) No less than 75% for peer group d Operating Expense Ratio No more than 75% for peer group Report Card 1 of 3 Asset Class Fund Name Symbol Meets All Criteria Watch Needs Attention STA Income Plus Fund N/A * LG American Century Growth TCRAX (a)(b) TM American Century Prime Money Market BPRXX * FG American Funds EuroPacific Growth REREX LB American Funds Fundamental Investors SM RFNEX EM American Funds New World RNWEX (b) LV American Funds Washington Mutual SM RWMEX (a) MB Aston/Fairpointe Mid Cap CHTTX SG Aston/TAMRO Small Cap ATASX (a)(b)(c) SG Baron Small Cap BSCFX (a)(b) LV BlackRock Equity Dividend MDDVX MV BlackRock Mid Cap Value Opps MDRFX (b) (a)(b) (a) WS Calamos Global Equity CAGEX (b) (a) LG Clearbridge Aggressive Growth SHRAX MB Dreyfus Mid Cap Index PESPX SN Dreyfus Natural Resources DNLAX LB Dreyfus S&P 500 Stock Index PEOPX * CI Federated Bond FDBAX LG Fidelity Advisor New Insights FNIAX (b) (a) SR Fidelity Advisor Real Estate FHEAX HY Franklin High Income FHIRX (a)(b)(c) *Fund is not subject to monitoring criteria 4

5 REPORT CARD CONTENT continued Monitoring Standards and Performance Criteria (Corresponds to the letters in the list below) Code Monitoring Standard Performance Criteria a Total Return 3 Years Median or greater for peer group b Total Return 5 Years Median or greater for peer group c Risk Adjusted Return 3 Years ( Sharpe Ratio ) No less than 75% for peer group d Operating Expense Ratio No more than 75% for peer group Report Card 2 of 3 Asset Class Fund Name Symbol Meets all Criteria Watch Needs Attention WS Franklin Mutual Global Discovery TEDIX (a)(b) EM Goldman Sachs EM Equity Insights GERAX SV Goldman Sachs Small Cap Value GSSSX EM Invesco Developing Markets GTDDX (a)(b)(c) AL Invesco Equity and Income ACEIX HY Invesco High Yield AMHYX SG Invesco Small Cap Growth GTSAX MG Janus Enterprise JGRTX SG Janus Triton JGMIX LB JPMorgan Disciplined Equity JDEAX LV JPMorgan Equity Income OIEIX (a) SV JPMorgan Small Cap Value PSOAX (a) IH Loomis Sayles Global Equity and Income LGMAX LG Neuberger Berman Socially Responsive NBSTX (b) (a) EM Oppenheimer Developing Markets ODMAX LV Oppenheimer Equity Income OAEIX CS PIMCO Low Duration PTLAX (a) IP PIMCO Real Return PRTNX (a) SB PIMCO StocksPLUS Small Fund PCKAX CI PIMCO Total Return PTTAX (a) (b) CL Pioneer Bond PIOBX MG Prudential Jennison Mid Cap Growth PEEAX (b) (a) MV RidgeWorth Mid Cap Value Equity SMVTX (a)(b) ST RS Partners RSPFX (a)(b) SB RS Technology RSIFX (b) (a)(c) 5

6 REPORT CARD CONTENT continued Monitoring Standards and Performance Criteria (Corresponds to the letters in the list below) Code Monitoring Standard Performance Criteria a Total Return 3 Years Median or greater for peer group b Total Return 5 Years Median or greater for peer group c Risk Adjusted Return 3 Years ( Sharpe Ratio ) No less than 75% for peer group d Operating Expense Ratio No more than 75% for peer group Report Card 3 of 3 Asset Class Fund Name Symbol Meets All Criteria Watch Needs Attention LG T. Rowe Price Growth Stock RRGSX TA T. Rowe Price Retirement 2010 RRTAX TD T. Rowe Price Retirement 2015 RRTMX TE T. Rowe Price Retirement 2020 RRTBX TG T. Rowe Price Retirement 2025 RRTNX TH T. Rowe Price Retirement 2030 RRTCX TI T. Rowe Price Retirement 2035 RRTPX TJ T. Rowe Price Retirement 2040 RRTDX TK T. Rowe Price Retirement 2045 RRTRX TL T. Rowe Price Retirement 2050 RRTFX TL T. Rowe Price Retirement 2055 RRTVX TL T. Rowe Price Retirement 2060 TRRZX CA T. Rowe Price Retirement Balanced RRTIX (a) (b) FV Templeton Foreign TEMFX IB Templeton Global Bond TPINX EM Wells Fargo Advantage EM Equity EMGAX (b) (a) 6

7 COMMENTARY American Century Growth: This fund is scheduled to be removed and replaced in the fall of American Funds Fundamental Investors SM : This fund is scheduled to be removed and replaced in the fall of American Funds Washington Mutual SM : This fund is on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar Large Value category. ASTON/TAMRO Small Cap: This fund is scheduled to be removed and replaced in the fall of Baron Small Cap: The fund is on the Watch because for three consecutive quarters its 5- year Total Return ranking exceeded the median of the Morningstar Small Growth category. The fund is also on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Small Growth Category. BlackRock Equity Dividend: This fund is scheduled to be removed and replaced in the fall of BlackRock Mid Cap Value Opps Inv: This fund is scheduled to be removed and replaced in the fall of Calamos Global Equity: This fund is scheduled to be removed and replaced in the fall of Fidelity Advisor New Insights: The fund is on the Needs Attention because for four consecutive quarters its 3- year Total Return ranking exceeded the median of the Morningstar Large Growth category. It is also on the Watch because for three consecutive quarters, its 5- year Total Return ranking exceeded the median of the Morningstar Large Growth category. Franklin High Income: The fund is on the Watch because for three consecutive quarters its 3- year and 5- year Total Return ranking exceeded the median of the Morningstar High Yield category. It is also on the Watch because for two consecutive quarters its 3- year Risk Adjusted Return ( Sharpe Ratio ) exceeded the 75 th percentile of the Morningstar High Yield Bond category. Franklin Mutual Global Discovery: The fund is on the Watch because for two consecutive quarters for its 5- year Total Return ranking exceeded the median of the Morningstar World Stock category. The fund is also on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar World Stock category. Invesco Developing Markets: The fund is on the Watch because for three consecutive quarters its 3- year Total Return ranking and one quarter its 5- year Total Return ranking exceeded the median of the Morningstar Diversified Emerging Markets category. It is also on the Watch because for one quarter its 3- year Risk Adjusted Return ( Sharpe Ratio ) exceeded the 75 th percentile of the Morningstar Diversified Emerging Markets category. JP Morgan Equity Income: The fund is on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar Large Value category. JP Morgan Small Cap Value: The fund is on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar Small Value category. 7

8 COMMENTARY continued Neuberger Berman Socially Responsive: This fund is scheduled to be removed and replaced in the fall of PIMCO Low Duration: The fund is on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar Short Term Bond category. PIMCO Real Return: The fund is on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar Inflation Protected Bond category. PIMCO Total Return: The fund is on the Needs Attention because for four consecutive quarters its 5- year Total Return ranking exceeded the median of the Morningstar Intermediate-Term Bond category. It is on the Watch because for one quarter its 3- year Total Return ranking exceeded the median of the Morningstar Intermediate-Term Bond category. Prudential Jennison Mid Cap Growth: It is on the Watch because for one quarter its 5- year Total Return ranking exceeded the median of the Morningstar Mid Growth category. It is also on the Needs Attention because for four consecutive quarters its 3- year Total Return ranking exceeded the median of the Morningstar Mid Growth category. Ridgeworth Mid Cap Value Equity:: The fund is in on the Watch because for two consecutive quarters its 3- year and 5- year Total Return ranking exceeded the median of the Morningstar Mid Cap Value category. RS Partners: The fund is in on the Watch because for three consecutive quarters its 3- year and 5- year Total Return ranking exceeded the median of the Morningstar Small Blend category. RS Technology: The fund is on the Watch because for two consecutive quarters its 5- year Total Return ranking exceeded the median of the Morningstar Specialty Technology category. The fund is also on the Needs Attention because for six consecutive quarters its 3- year Total Return ranking exceeded the median of the Morningstar Specialty Technology category. It is also on the Needs Attention because for six consecutive quarters its 3- year Risk Adjusted Return ( Sharpe Ratio ) exceeded the 75 th percentile of the Morningstar Specialty Technology category. This fund is scheduled to be removed and replaced in the fall of T. Rowe Price Retirement Balanced: The fund is on the Needs Attention because for four consecutive quarters its 5- year Total Return ranking exceeded the median of the Morningstar Conservative Allocation category. The fund is also on the Watch because for three consecutive quarters its 3-year Total Return ranking exceeded the Morningstar Conservative Allocation category. Wells Fargo Advantage Emerging Markets Equity: The fund is on the Needs Attention because for six consecutive quarters its 3- year Total Return ranking exceeded the median of the Morningstar Diversified Emerging Markets category. The fund is also on the Watch because for three consecutive quarters its 5- year Total Return ranking exceeded the median of the Morningstar Diversified Emerging Markets category. This fund is scheduled to be removed and replaced in the fall of

9 DISCLOSURE & LEGAL Morningstar peer group rankings are based on total return performance and do not reflect the effect of sales charges. Funds are ranked within a universe of funds similar in investment objective. Morningstar Rating: For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating TM based on a Morningstar risk-adjusted return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receives four stars, the next 35% receives three stars, the next 22.5% receives two stars and the bottom 10% receives one star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The overall Morningstar Rating TM for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and ten-year (if applicable) Morningstar Rating TM metrics. No Agency, Advisory or Fiduciary Role The issuers, underwriters and producers of this report seek to deliver a preliminary understanding of issues related to the management of retirement plans and their investment alternatives. No warranty is offered or implied through the offer or delivery of this information. This report is provided without cost or obligation. As such, DO NOT rely on this report to make any decisions without additional effort, expense and/or risk. Please consult investment or legal counsel about how and why you may wish to take action based, in part, upon the information and issues addressed in this report. About FRA PlanTools The PlanTools TM Risk Management System is a suite of solutions that help plan sponsors and their advisors to make better investment decisions on behalf of plan participants. Since 1998, PlanTools, LLC and its corporate affiliates have defined, designed, developed and delivered tools, information and services to help manage fiduciary investment risks and returns. Effective Fiduciary Risk Assessment, LLC (FRA) and PlanTools, LLC merged, with FRA assuming management responsibility and ownership of PlanTools, LLC. This report is solely the product of PlanTools, LLC and is solely responsible for the results of our efforts. We are not, however, responsible for the purpose and usage of this information. About Security Benefit Security Benefit is an organization that has more than 100 years of experience in the financial services industry. The service commitment that s sustained the firm over the last century forms the core of every client relationship. From its headquarters in Topeka, Kansas, Security Benefit is an organization whose products and services have evolved in step with the demands of a continuously changing marketplace. We understand the need for competitive, comprehensive, and unique financial solutions. We respond to that need with a full-service approach to retirement plan design, implementation, and administration, as well as flexible, modular, and innovative investment solutions. You should consider the investment objectives, risks, and charges and expenses of the mutual funds available through the SFR SM program carefully before investing. You may obtain a prospectus that contains this and other information about the mutual funds by calling our National Service Center at You should consider the investment objectives, risks, and charges and expenses of the mutual funds carefully before investing. You may obtain a prospectus that contains this and other information about the funds by calling our National Service Center at You should read the prospectus carefully before investing. Investing in the funds involves risk and there is no guarantee of investment results. Past performance is no guarantee of future results. Investing in mutual funds involves risk. Investment return and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. For fund specific performance and risks, refer to the SFR Program performance sheet for the most recent quarter end, attached hereto. Securities are distributed by Security Distributors, Inc., a subsidiary of Security Benefit Corporation ( Security Benefit ). Security Distributors, Inc. 9