Liberty Mutual 401(k) Plan Annual Fee Disclosure Statement

Transcription

1 Liberty Mutual 401(k) Plan Annual Fee Disclosure Statement Important information about Your Options, Fees and Other Expenses The Liberty Mutual 401(k) Plan (the Plan ) is a great way to build savings for your future. Through the Plan you get: The convenience of automatic savings through payroll deductions and the opportunity for tax advantages through before-tax and Roth contributions Company Matching Contributions from Liberty Mutual up to 6% of pay that you contribute to the Plan A wide variety of investment options that are monitored by the Liberty Mutual Retirement Committee What s Inside 1. About Fees and Expenses 2. The Plan s Options 3. -Related Information 4. Terms You Should Know In accordance with the Department of Labor (DOL) Fee Disclosure Regulation, the Plan is required to provide you this information on the Plan s investment-related performance and fee information, so that you can more effectively compare the Plan s investment options. You ll want to make sure you are taking full advantage of the Plan by choosing a contribution rate and investments in the Plan to meet your long-term retirement needs. Use the tools available on the Your Total Rewards website to explore how your savings and investment decisions impact your long-term 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. 1. About Fees and Expenses As with other investments, certain fees and expenses for the Plan are paid by investors; in this case, participants in the Plan. There are several types of fees: Some fees are asset-based fees. You won t see these fees directly because they are charged to Plan investment options and reduce your investment earnings. These fees are shown in Section 3 of this statement. Asset-based fees are primarily used to pay for investment management fees and Plan expense fees (i.e., administrative services and Plan recordkeeping fees). The investment management fees vary by Plan investment option, while Plan expense fees are five basis points (0.05%) for all Plan investment options. They are included in the value shown under the Total Asset-Based Fee column of the chart in Section 3. You may also have individual fees that result in a separate fee being charged to your account, such as a fee for Professional Management program services if you have enrolled in the Professional Management fee-based service available through Financial Engines. (See the box on the right to learn about individual fees that may apply to your account.) Individual Fees in the Plan Professional Management Program Services fees: If you sign up for Professional Management, you will be charged a fee that is based on the size of your account: - Up to $100, % of assets - $100,001 to $250, % of assets - $250,001 or more 0.30% of assets Fees are assessed quarterly. Learn more about applicable Plan fees on the Financial Engines Website. 1

2 2. The Plan s 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: Core Funds primarily provide you with investments that have returns that can change as the market goes up and down. Retirement Target-Date Portfolios are a diversified composition of core funds and non-core funds. These fund options are designed to be long-term investments for individuals with particular retirement dates in mind. You may change your investment elections daily. Choosing Your 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 Options. To learn more about the investment options offered and fees that apply to these funds, visit the Your Total Rewards website. You can find fund facts, fund performance, and other fund information. You can also receive more information about the funds by calling the Benefits Express at Representatives are available from 9:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday. Some of the information you can find on the website or request copies of includes: Copies of summary prospectuses 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 assets comprising the portfolio of each fund To Enroll or Make Changes to Your s. You can enroll in the Plan or make changes to your investments at any time by logging on to Your Total Rewards. 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 > Manage s > Change s and follow the instructions on the website. To help you create an investment strategy, the Plan has designated Financial Engines, an independent Registered Advisor, to provide fiduciary investment advice and managed account services to Plan participants. Financial Engines offers you the option to use the Online Advice service or to sign up for the fee-based Professional Management program service. If you use the Online Advice tools, you will select and manage your account investment based on the tools provided by Financial Engines. If you choose the Professional Management program service, Financial Engines will select and manage your investment mix for you. Fees apply for Professional Management program services; see the Individual Fees in the Plan box in Section 1. If you are unable to log on to the website you may also enroll or change investment options by calling Benefits Express at Representatives are available from 9:00 a.m. to 5:00 p.m., Eastern Time, Monday through Friday. 2

3 3. -Related Information (Comparative Chart) The following chart provides you with performance information for the Plan investment options, showing you how well the investments have performed in the past, along with the fees and expenses you will pay if you invest in an option. Keep in mind, however, that past performance does not guarantee how the investment option will perform in the future. Your investment in these options could lose money. Information about an option s principal risks is available on the Plan s website at General Information Fee Information Historical Performance Avg. Annual Total Return as of 11/30/16 (Fund & Benchmark) Fund Name/ Benchmark Target Date Portfolios Asset Class Total Asset- Based Fees Annual Cost Per $1,000 of 1 yr. 5 yr. 10 yr. Incept. to date Retirement Income Target Date 0.27% $ % 4.74% 4.11% 5.05% Benchmark: Dow Jones Moderately Conservative Index 4.45% 5.18% 4.50% 5.50% Retirement Target Date 2010 Target Date 0.27% $ % 6.12% 4.39% 5.31% Benchmark: Dow Jones Target 2010 TR 2.86% 3.35% 3.90% 4.93% Retirement Target Date 2015 Target Date 0.27% $ % 7.00% 4.69% 5.51% Benchmark: Dow Jones Target 2015 TR 3.85% 4.30% 4.00% 5.10% Retirement Target Date 2020 Target Date 0.27% $ % 7.82% 4.90% 5.62% Benchmark: Dow Jones Target 2020 TR 4.22% 5.44% 4.24% 5.38% Retirement Target Date 2025 Target Date 0.27% $ % 8.63% 5.10% 5.81% Benchmark: Dow Jones Target 2025 TR 4.78% 6.69% 4.57% 5.70% Retirement Target Date 2030 Target Date 0.26% $ % 9.46% 5.24% 5.95% Benchmark: Dow Jones Target 2030 TR 5.23% 7.88% 4.85% 5.98% Retirement Target Date 2035 Target Date 0.26% $ % 9.95% 5.47% 6.10% Benchmark: Dow Jones Target 2035 TR 5.65% 8.84% 5.08% 6.21% Retirement Target Date 2040 Target Date 0.26% $ % 9.97% 5.48% 6.10% Benchmark: Dow Jones Target 2040 TR 5.98% 9.55% 5.28% 6.39% Retirement Target Date 2045 Target Date 0.26% $ % 9.97% 5.47% 6.10% Benchmark: Dow Jones Target 2045 TR 6.22% 9.93% 5.45% 6.49% Retirement Target Date 2050 Target Date 0.26% $ % 9.96% 5.46% 6.09% Benchmark: Dow Jones Target 2050 TR 6.35% 9.99% 5.48% 6.51% Retirement Target Date 2055 Target Date 0.26% $ % 9.99% 5.84% 6.33% Benchmark: Dow Jones Target 2055 TR 6.36% 9.99% 5.48% 6.51% Retirement Target Date 2060 Target Date 0.26% $ % 9.88% N/A 11.22% Benchmark: Dow Jones Target 2060 TR 6.36% 9.99% 5.48% 12.07% 3

4 General Information Fee Information Historical Performance Avg. Annual Total Return as of 11/30/16 (Fund & Benchmark) Fund Name/ Benchmark Equity Funds Asset Class Total Asset- Based Fees Annual Cost Per $1,000 of 1 yr. 5 yr. 10 yr. Incept. to date U.S. Large Cap Equity Index Equity 0.06% $ % 14.41% 6.93% 11.00% Benchmark: S&P 500 Index 8.06% 14.45% 6.89% 11.00% U.S. Small-Mid Cap Equity Index Equity 0.08% $ % 14.17% N/A 11.18% Benchmark: Russell 2500 Index 10.65% 14.15% 7.53% 11.13% International Equity Index Equity 0.10% $ % 5.58% 0.89% 2.98% Benchmark: MSCI EAFE Index -3.66% 5.62% 0.72% 3.18% U.S. Small-Mid Cap Equity Portfolio Equity 0.76% $ % 13.43% 8.00% 9.04% Benchmark: Composite Benchmark 10.74% 14.24% 7.32% 8.69% International Equity Portfolio Equity 0.58% $ % 3.47% 1.54% 3.55% Benchmark: Composite Benchmark 0.43% 4.77% 1.79% 4.12% Fixed Income/Money Market Funds U.S. Intermediate Bond Index Bond 0.08% $ % 2.52% 4.33% 5.43% Benchmark: Bloomberg Barclays Aggregate Bond Index 2.17% 2.43% 4.27% 5.46% Diversified Bond Portfolio Bond 0.33% $ % 2.79% 5.28% 5.31% Benchmark: Composite Benchmark 4.58% 2.96% 4.71% 4.79% U.S. Short-Term Bond Portfolio Bond 0.23% $ % 1.07% 2.62% 3.38% Benchmark: Bloomberg Barclays 1-3 Yr US Gov't 0.74% 0.60% 2.18% 3.13% Money U.S. Government Money Market Market 0.25% $ % 0.01% 0.76% 1.23% Benchmark: BofA ML US Treasury Bill 3 Month 0.32% 0.11% 0.84% 1.32% 1 Total asset-based fees are investment management company fees plus other Plan-specific costs charged to the investment fund to cover administrative services, such as Plan administration, trustee, accounting, legal, and other Plan-level costs including market value adjustments. 2 Average Annual Total Returns are net of asset based fees. 4

5 4. Terms You Should Know Here are a few key terms and concepts to help you understand the information described in this statement. Asset-based fees: Fees that are charged as a percent of holdings in an investment to cover investment management fees plus any asset-based administrative service fees. Asset-based fees are also referred to as the expense ratio, or, more technically, the fund s total annual operating expenses. (See the box on the right for an example of how asset-based fees work.) 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 large-cap stocks. Bond Fund: An investment fund that invests primarily in bonds and other debt instruments. Bonds are issued by various entities, including governments (federal, state, local) or corporations. Bond funds may also be invested in debt instruments such as mortgage-backed securities. How Asset-Based Fees Work Let s assume your current account balance is $30,000 and you re invested in three funds as shown below. Here s an estimate of what you might pay annually in total expenses: Asset-Based Fees Balance As % of Assets Dollar Amount U.S. Short Term Bond Portfolio $10, % $23.00 U.S. Large Cap Equity Index $17, % $10.20 International Equity Portfolio $3, % $17.40 Total $30,000 - $50.60 Because asset-based fee expenses are accumulated daily, your actual cost will vary as your account value changes. 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 long-term investment experience. Non-Core Funds: These funds are only included in Target-Date Portfolios. They add additional diversification to these portfolios. Designated Advisor: This is the individual or organization that manages investments for individuals who choose to participate in Professional Management program services. Equity Fund: An investment option that invests primarily in corporate stocks. Individual Fees: Please see Professional Management Program Services. Management Fees: Fees paid to the investment manager for selecting and managing the investments in an investment option. Professional Management Program Services: You have the option to sign up for Professional Management program services where the designated investment advisor will manage your investment mix for you. If you choose this service, the fees described in the Individual Fees in the Plan box in Section 1 will apply. Target-Date Portfolios: These funds are diversified investment strategies made up of core funds and noncore funds. Each fund is designed to be a single investment solution for a particular retirement date. To see more definitions related to investments, go to Your Total Rewards. You will find additional definitions at Savings and Retirement > Summary > Fund Detail. 5