Fidelity and TIAA-CREF Offer Lower Share Class Mutual Funds
Fantastic News! The UW TSA 403(b) Plan is able to offer Fidelity K Class Shares and TIAA-CREF Premier Class Shares.
Premier and K Class Shares are a class of shares made available by TIAA-CREF and Fidelity to very large institutional investors. Because of the size of our aggregated investments – made by the many individuals in our plan, participants in our UW 403(b) TSA Plan qualify to purchase these types of shares and benefit from their typically lower expense ratios.
For a mutual fund, the expense ratio is the total annual fund or class operating expenses (before waivers or reimbursements) paid by the fund and stated as a percent of the fund’s total net assets.
All the Fidelity Freedom Funds and TIAA-CREF Lifecycle Funds (pre-diversified target retirement date funds) are available as part of the lower share class offering. The other Fidelity and TIAA-CREF funds, including those being offered with the lower share classes, are noted on the returns. http://www.wisconsin.edu/hr/benefits/retsav/returns.htm
Both TIAA-CREF Premier Class and Fidelity K Class Shares Funds have the same management team and investment objectives as the representative funds in other share classes – the expense ratios are just lower. TIAA-CREF Premier Share Class Funds have expense ratios 10 basis points lower than those in the normal Retirement Share Class. Fidelity K Share Funds are generally between 12 and 20 basis points cheaper than their counterparts. For example, an expense ratio of .50% is 50 basis points.
An individual investor cannot invest in Premier or K Class Shares in their personal accounts – only those employees in a retirement plan that is large enough to qualify may invest in them.
The UW TSA 403(b) Plan Annual Report http://www.wisconsin.edu/hr/benefits/retsav/tsareport2010.pdf on page 11 lists the top 50 funds in our plan according to contributions. This will give you some idea of our yearly contributions to the largest Fidelity and TIAA-CREF funds. In the first few pages of our annual report you can see the combined total of contributions sent to our investment companies.
Just as a reminder, none of the mutual funds in our plan have any loads (sales commissions or broker fees) or 12b-1 fees (marketing or advertising fees).
The fees and expenses of the investments you select have an impact on the overall returns of your investment portfolio. The University of Wisconsin reviews the investment options available to you and works with our companies to make sure you have the lowest cost share classes available.
For information on these funds, schedule an individual counseling session http://www.wisconsin.edu/hr/benefits/retsav/counsel.htm with a Fidelity and/or TIAA-CREF representative when visiting your campus. Meeting with a representative does not obligate you to start an account. This is a great opportunity to ask questions.
This document was last revised on December 6, 2011