How to Read the Investment Performance Summary
Your 403(b) investments can be grouped by categories of funds. The following categories of funds offered by Duke's retirement vendors are listed in the Vendor Performance Summary:
A Fixed Annuity, as in a retirement savings plan, is an insurance contract that guarantees the safety of your principal and provides guaranteed interest rates for the life of your contract with the company.
A Variable Annuity, as in a retirement savings plan, is an insurance company fund that invests in the common stock and bond markets with no guarantees of the safety of the principal or the rate of return.
A Mutual Fund is a pool of money from investors with similar objectives. This money is professionally managed to provide specific types of investment income, such as interest, dividends, or capital appreciation. Money can be easily transferred from one fund to another, thus allowing you to change your investments as your investment objective changes.
There are also classes of mutual funds within categories of funds. The following classes of mutual funds offered by Duke's retirement vendors are listed in order from decreasing to increasing risk to the investor:
Money Market Funds are funds or annuities that invest in short-term debt instruments. Interest is earned at the current rate.
Income Funds hold mainly municipal, corporate, and / or government bonds. Bonds are formal certificates of debt, usually issued by corporations or units of government.
Asset Allocation Funds capture parts of the market, including stocks, bonds, money markets, real estate, and other mutual funds to provide a diversified portfolio. The aim of these funds is to provide a diversified portfolio for an investor, without the individual investor having to decide how to divide their investments among all the available options.
Socially Conscious Funds do not heavily participate in investment vehicles that would harm the natural environment. The fund itself is much like an asset allocation fund, investing in various money markets, bonds, and stocks. Some examples of damaging activities that the fund does not significantly invest in include the sale or manufacture of weapons, alcohol, or tobacco products.
Growth and Income Funds offer a combination of stocks (growth funds) and bonds (income funds).
Growth Funds are invested primarily in stocks.
The following cumulative individual fund returns are reported in the Vendor Performance Summary:
Year-to-Date Return is the amount of return that is reported from January 1st to the present.
Three-Month Return reports return for the previous three months.
1-Year Return reports cumulative return for the previous one year period. The 3-Year, 5-Year, and 10-Year Returns are average returns over the given years. It is important to consider how the fund has done historically as well as how it is performing in today's market.
Expense Ratio is the annual percentage of a fund's assets that is paid out in expenses. This fee is not paid by the participant, but is already reflected in the return of the fund. Expense ratios are reported annually as of the end of the first quarter (March 31) of the year. In fixed annuities, the expense ratio represents the risk expense associated with the total cost of insuring account accumulation.
Past performance is no guarantee of future results. All performance is historical and assumes reinvestment of dividends and capital gains. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than original cost. International investing entails additional risks associated with investing including currency exchange fluctuations. Vanguard STAR, Total International Stock Index Fund, and LifeStrategy portfolio expense ratios are a weighted average. "N/A" means that the fund was not reported by the vendor, indices, or fund inception proceeds time length.
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