When developing investment objectives, the Investment Committee is encouraged to:

1. Evaluate Asset Classes - Asset classes are the type of investment such as stocks, bonds, or cash equivalents such as money markets. Your retirement plan should cover all three. Participants should be able to diversify their accounts at all times among at least three investment vehicles with disparate risk/return characteristics. The minimum suggested frequency for available rebalancing is quarterly. Asset mixes may help enhance a participant’s chance of success in meeting long term retirement income needs.
2. Examine Overall Fund Expenses - Next, as investment categories are considered, a fiduciary will want to consider overall expenses associated with fund investing. Other investment fees, such as an additional asset management fee or advisor fee, may also apply with some 401k programs. Under the American 401k, there is not an asset management fee or advisory fee. Still, mutual funds are not free, and although the fees they charge are regulated, they can vary widely from one fund family to another and even within individual funds in that family. Before selecting or investing in a mutual fund, you should carefully consider the investment objectives, risks, charges and expenses of the fund. For this and other information, contact us for a current prospectus. Please read it carefully before you invest or send money. Mutual fund expenses are important because they lower the return to a fund’s investors.

   They are generally sorted in these categories:

   Expense Ratio – An expense ratio is a measure of what it costs an investment company to operate a mutual fund (including management, daily accounting, legal, tax, auditing, and reporting expenses). An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management, and deducted from a fund’s earnings. An annual marketing or distribution fee on a mutual fund, the 12b-1 fee is considered an operational expense and, as such, is included in a fund's expense ratio. Sales Charges – Generally, there is no sales charge for a participant to buy or sell mutual funds within the American 401k program as described on this website. Short Term Trading Fees - Many experts believe that excessive trading occurs at the expense of long-term investors by increasing operating costs for the funds. The SEC has issued a regulation that every mutual fund must implement redemption fees for any fund held on a very short term basis. It is important to review an individual fund prospectus for details of applicable short term trading fees. Separately, whenever mutual funds will be liquidated on a Plan level (all Plan assets), it is important to check with the mutual fund family and review the prospectus for details of any early redemption charges that could apply. Trading Costs – Trading costs include charges such as a brokerage commissions or investment company transaction fees, and if applicable, are separate from any sales charges. Trading costs do not apply within the American 401k program. Separately, if your Plan has a securities brokerage option, individual securities do have trading fees.

Tips for the Trustee when considering performance and fund selection:

1. Do not chase investment returns (performance). Initial selection or switching funds within the plan to utilize the “hot” performers of the previous year is typically not in the best interest of the Plan. Instead, participants can benefit by a well founded Investment Committee strategy and sustained fund investing.
2. Consider the risk associated with a particular fund, in order to achieve its goal, before assuming that the highest historical returns assure the best choice. Although performance is an important factor in the evaluation of a fund, comparing performances alone is an imperfect methodology.
3. Look closer at your potential return after expenses. Higher expense ratios may indicate that a fund manager determined to take more risk with potentially higher return, as a stated objective by prospectus. Also, what an investor receives is the net return after expense. Expenses count, yet should not be overemphasized without consideration of return. So, expenses alone should not disqualify a fund in the decision making process.

Investment categories would be detailed in your Investment Policy Statement. General offerings may include:

• Money Market or Capital Preservation
• Corporate Bond, US Government Bond, International Bond, Strategic Income
• Balanced
• Large Cap Growth, Large Cap Value, Large Cap Blend
• Mid Cap Growth, Mid Cap Value, Mid Cap Blend
• Small Cap Growth, Small Cap Value, Small Cap Blend
• International Growth, International Value, International Blend
• International Small Cap, International Mid Cap, Developing Markets
• Index Funds
• Lifecycle Funds, Lifestage Funds
• Sector Funds (Such As Real Estate, Natural Resources, Healthcare, and Technology)