Feb. 2015: Beyond the Basics
The Texas Health 401(k) Retirement Plan gives you a wide range of investment choices to choose from. How much do you know about your choices?
Mutual funds
Mutual funds are the most common investments for retirement savings. A mutual fund is an investment where a group of people pool and invest their money. Every mutual fund has a manager who invests the pooled money into specific securities (usually stocks, bonds or cash equivalents). Each mutual fund has specific investment objectives, and fund managers choose investments that are consistent with those objectives.
In the Texas Health 401(k) Retirement Plan, the American Funds Washington Mutual fund and American Century Income & Growth fund are examples of stock mutual funds.
Money market funds
Money market funds are comprised of short-term securities (less than one year) representing high-quality liquid debt and monetary instruments. Their purpose is to provide investors with a safe place to invest easily accessible, cash-equivalent assets. They earn interest for shareholders, maintain a net asset value (NAV) of $1 per share and are not intended as a long-term investment option.
In the Texas Health 401(k) Retirement Plan, the JPMorgan Prime Money Market-Capital fund is an example of a money market fund.
Target date funds
Target date retirement funds are made up of multiple asset classes. They are professionally managed and offer a diversified investment in a single fund. These funds are meant to align with an expected retirement date. The investment allocation will change over time. The funds will become increasingly more conservative as the target retirement date approaches. Participants may choose to invest in any of the other target retirement funds or any other investments in the lineup. As with all investments, the principal value of the fund(s) is not guaranteed at any time, including at the target date.
In the Texas Health 401(k) Retirement Plan, the JPMCB JPMCB SmartRetirement Passive Blend* Funds are examples of target date funds.
Corporate bonds
Corporate bonds are debt obligations that private corporations issue to raise capital. So, when people invest in corporate bonds they’re lending the issuing corporation(s) the money they need to finance a particular project or business strategy. You can receive interest and your principal back over predetermined amounts of time.
In the Texas Health 401(k) Retirement Plan, the American Century Diversified Bond fund is an example of a corporate bond.
To learn more about investment options available for you, log on to www.retireonline.com, select the Texas Health 401(k) Retirement Plan link and click on Fund Information at left.
To change investment elections in your account, log on to www.retireonline.com, select the Texas Health 401(k) Retirement Plan link, select “Make Changes” from the “Manage Investments” menu, and make and confirm your selections.
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For more complete information about any of the mutual funds available within the retirement plan, please call 800-345-2345. The TTY number for those with a hearing impairment is 800-345-1833. Investors should carefully consider the investment objectives, risks, charges and expenses of the fund. Please carefully read the prospectus which contains this and other important information before you invest or send money. An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
Diversification does not assure a profit nor does it protect against loss of principal. Diversification among investment options and asset classes may help to reduce overall volatility. Bond funds have the same interest rate, inflation, and credit risks that are associated with the underlying investments owned by the Fund. Interest rate risk means that as interest rates rise, the prices of bonds will generally fall, and vice versa. Inflation risk is the risk that the rate of return on an investment may not outpace the rate of inflation. Credit risk is the risk that issuers and counterparties will not make payments on securities and investments held by the Fund.
*The Commingled Pension Trust Funds (JPMCB SmartRetirement Passive Blend Funds) of JPMorgan Chase Bank N.A. are collective trust funds established and maintained by JPMorgan Chase Bank, N.A. under a declaration of trust. The funds are not required to file a prospectus or registration statement with the SEC, and accordingly, neither is available. The funds are available only to certain qualified retirement plans and governmental plans and are not offered to the general public. Units of the funds are not bank deposits and are not insured or guaranteed by any bank, government entity, the FDIC or any other type of deposit insurance. You should carefully consider the investment objectives, risk, charges, and expenses of the fund before investing.
Certain underlying funds of the JPMCB SmartRetirement Passive Blend Funds may have unique risks associated with investments in foreign/emerging market securities, and/or fixed income instruments. International investing involves increased risk and volatility due to currency exchange rate changes, political, social or economic instability, and accounting or other financial standards differences. Fixed income securities generally decline in price when interest rates rise. Real estate funds may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector, including but not limited to, declines in the value of real estate, risk related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by the borrower. The fund may invest in futures contracts and other derivatives. This may make the fund more volatile. The gross expense ratio of the fund includes the estimated fees and expenses of the underlying funds. A fund of funds is normally best suited for long-term investors.
https://www.retireonline.com/rps/education_center/investmenttermsglossary.pdf
PT215677 (12/14)