[topic 1]

Click Here to View the Mutual Fund Families Potentially Available for Your Web 401k Plan

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[topic 2]

Mutual Funds Are the #1 Choice of 401k Investors

Mutual funds are popular with 401k investors for several reasons:

-- Most mutual fund investments convert quickly and easily to IRA rollover accounts. The investor can keep the same investments and pursue the same investment strategy as with the 401k even after terminating employment, yet can later change the investments if desired.

-- Mutual funds have exchange privileges that allow investors to transfer money between investment portfolios at no charge or for only a nominal bookkeeping charge.

-- Mutual funds are priced on a daily basis. (Web 401k automatically receives these daily prices and posts them to participants' accounts.)

-- Mutual funds are usually offered in more than one class of shares. Investors can weight investment amount, anticipated holding period, and other relevant factors in deciding which class of shares to purchase.

-- Most mutual fund groups offer 24-hour-a-day telephone access to 401k account information.

-- It's easy for investors to access historical and current investment performance and portfolio details by calling the mutual fund companies directly and speaking with an account service representative or requesting prospectuses on the investments; much of the information is also available online.

-- There are more than 6,500 different mutual fund portfolios available today — that's double the number available just 10 years ago.

-- An estimated 67 million U.S. households — nearly 25% — invest in mutual funds, either directly or through a company-sponsored 401k plan.

-- Generation "X" (ages 18 to 30) has the lowest level of household assets yet the second highest proportion of financial assets in mutual funds.

-- The flexibility afforded by a mutual fund family of investments is very important to 401k investors, whose goals and retirement savings strategies can change dramatically during the often decades they participate in various 401k plans.

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[topic 3]

No-Load Versus Load Mutual Funds (and their applicability to Web 401k)

Mutual funds come in two types: load funds and no-load funds. Load mutual funds charge either a front-end (purchase) or back-end (liquidation) fee on shares. No-load funds do not. Both work equally well with Web 401k retirement plans.

Because most no-load mutual funds do not involve fees (or only very nominal fees) upon purchase or liquidation, most 401k investors prefer them to load funds. Thus, most employers prefer to equip their 401k plan with no-load mutual funds rather than load mutual funds. Thus, we focus our 401k investment discussions on no-load mutual funds, not load mutual funds.

-- All mutual funds, whether load or no-load, involve annual management fees and 12-b1 fees. These are automatically deducted from investors' returns each year. Certain transaction fees may also apply.

-- Each mutual fund family, whether load or no-load, offers a spectrum of investments, from a money market fund to potentially more volatile, potentially more lucrative, stock and bond portfolios, to meet a spectrum of risk-return scenarios.

-- Choosing no-load mutual funds for your company plan means contributions to your employees 401k accounts won't be diminished by any investment purchase or liquidation fees; the full amount makes it into the investment.

-- Using no-load mutual fund investments generally means relatively low asset management and 12b-1 fees for your plan's participants. Your participants keep more of what they invest, increasing the compounding growth potential of their accounts.

Again, because of the lower fees involved, no-load mutual funds are generally preferred over load mutual funds by 401k investors. If, however, your company prefers to offer a family of load mutual funds as its 401k investments, we can certainly accommodate you. Simply contact us for a listing of potential load mutual fund families — and remember, whether it's load or no-load mutual funds that you're considering, make sure you and your 401k investors carefully read the investment prospectuses so you're aware of any and all fees before allocating any money to the investment. Prospectuses are most readily available through the mutual fund company, whether by mail, e-mail or online. Use the contact information offered in our Potential 401k Mutual Fund Investments listing.

[topic 4]

Add Self-Directed Brokerage Accounts, If You Like

As discussed above, mutual funds are the number one choice of 401k investors, and most 401k investors prefer no-load mutual funds to load mutual funds.

With self-directed brokerage accounts, your 401k investors have access to all types of mutual funds as well as to stocks, bonds and other types of investments (visit our Self-Directed Brokerage Accounts page for details). So are self-directed brokerage accounts more desirable for your 401k than only mutual funds?

There are many reasons why employees might favor individual self-directed brokerage accounts — the investment selection, the sense of hands-on control, the quick-access to account information. Other employees, though, might feel intimidated and overwhelmed by the extent of investment choice; they might prefer their employer narrowing the field to a single family of quality no-load mutual funds that offers sufficient investment selection within a grouping small enough that investors can look at each fund carefully before choosing the one(s) that are right for them.

-- With Web 401k, your company can offer no-load mutual funds, self-directed brokerage accounts, or both.

-- Web 401k Elite allows for both self-directed brokerage accounts and a family of no-load mutual funds, while Web 401k Economy allows for one or the other. Choose the configuration that you and your employees will find most appealing. (See our Pricing and our Options pages to compare Web 401k Elite with Web 401k Economy on all fronts.)

-- To view the no-load mutual fund families potentially available for your Web 401k plan, go to our no-load mutual fund listings.

-- To view the self-directed brokerage accounts potentially available for your Web 401k plan, go to our self-directed brokerage account listings.

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[topic 5]

Choosing a Family of No-Load Mutual Funds for Your 401k Plan

In selecting a mutual fund group for your 401k plan, it's important to include a spectrum of investments:

-- Include a money market fund for conservative investors seeking capital preservation.

-- Include some lower-risk equity and bond portfolios.

-- Include some medium-risk equity and bond portfolios.

-- Include some high-risk/potentially-higher-return equity and bond portfolios.

In this way your 401k plan will appeal to employees interested in amassing any of a variety of portfolio mixes. Employees can select portfolios that match their investment experience, temperament, and objectives.

-- The above is not meant as a cookie-cutter formula for arriving at your 401k investment mix. It is a good idea to consult a professional tax and/or investment advisor in making your final decisions. We can help, too.

-- Please also glance through the below comments on Risk, Return and Investing and the Frequent Trading of Mutual Funds.

-- See also this website's Key Principles to Selecting Your 401k's Investments & Investing Wisely in Them.

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[topic 6]

Looking for a Mutual Fund Group We Don't Have Listed?

Contact us if you don't see the mutual fund group you want when you view the no-load mutual fund listings.

-- Call us at (800) 660-0050, or contact us via e-mail.

-- There's a good chance we can add your request to our listing.

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[topic 7]

It's Easy to Get Mutual Fund Performance Information

Performance information adds to your knowledge about an investment gained from reading the investment's prospectus. The most common ways to get specific investment performance information are:

-- Contact the investment company directly.

-- Utilize free online mutual fund rating services. A web search for "investment ratings" will bring up dozens of independent, consumer-oriented mutual fund rating services. Morningstar (www.morningstar.com), Standard & Poor (www.ratings.standardpoor.com), Value Line (www.valueline.com), Mutual Fund Investor's Center (www.mfea.com), and Smart Money (www.smartmoney.com) are some of the most popular sources for independent, unbiased ratings and comparisons; they have solid reputations, but they're by no means the only reliable services.

-- Utilize your favorite web browser or search engine. All have quick access to mutual fund information. Please refer to your particular browser/search engine for details.

Keep in mind...

-- Most rating services charge for certain types of performance information.

-- Performance information received from mutual fund companies is generally free; however, it may arrive accompanied by sales literature.

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[topic 8]

A Few Comments About Risk, Return and Investing

Investing is a risk-return dichotomy. Mutual fund money market investments are considered very safe, and offer a relatively low, predictable rate of return, although that return, like any, cannot be guaranteed. At the other end of the risk-return dichotomy are mutual funds that can be extremely violate, offering investors the possibility of dramatic gains (and losses).  Mutual fund investments can lose value in a volatile market -- just as they can gain value.

-- Shares of mutual funds, including money market funds offered by fund companies, are not guaranteed by any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, or any other agency, and they involve risk, including the possible loss of the principal amount invested.

-- In general, the more volatile a mutual fund investment (i.e., the less predictable its rate of return), the more POTENTIALLY lucrative its earnings. More volatile investments are considered to be more risky investments.

-- The investment return and principal value of an investment will fluctuate. An investor's shares, when redeemed, may be worth more or less than when purchased.

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[topic 9]

A Few Comments About Trading of Mutual Funds Frequently

According to the Investment Company Institute, the mutual fund industry's trade association, for the twelve months from July 30, 1999 to July 30, 2000, approximately 42% of assets in the average stock mutual fund were bought or sold, meaning only a bit more than half the money in the fund actually stayed put for that period. That is up from approximately 40% turnover for the 12 months prior. Some retirement plan experts believe some of this fast trading is occurring in 401k plans.

-- According to most academic studies, frequent trading of mutual funds to squeeze out a few percentage points of gain a bad idea. Studies confirm what has been suspected by professional money managers for years — namely, frequent mutual fund trading usually hurts investors' long-term returns.

-- As reported in the Wall Street Journal (9/22/00, Lucchetti, Aaron, "Frequent Trading Worries Fund Firms"), a recent study by University of California, Davis assistant professor Terrance Odean and professor Brad Barber found that investors who traded mutual funds most frequently had the worst returns for a five-and-a-half year period ending December 1996.

-- During that period the average household earned an annualized return of approximately 15.3% from their mutual fund investments. Frequent mutual fund traders earned an average annualized return of only 10% for the same period.

With Web 401k you can discourage frequent trading by limiting your 401k investment selection to a single family of no-load mutual funds.

-- By offering a single family of no-load mutual funds PLUS self-directed brokerage accounts, which is also an option with Web 401k, you leave the door open for more sophisticated investors to choose self-directed brokerage accounts and thus trade stocks, bonds and mutual funds whenever they see fit while steering less sophisticated investors to the less intimidating, less complicated world of a single family of quality no-load mutual funds.

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[topic 10]

Mutual Fund Expense Fees

All "load" and "no load" mutual fund investment companies charge their investors annual management fees to cover the fund's operating expenses. Management fees cover such expenses as auditing, record keeping, administration, mailing of statements, advertising, providing telephone support, investment managers salaries, commissions to brokers, etc. Typically these management fees, which are automatically deducted from each investors account, range from a low of 1/2 percent to a high of 2 percent annually.

-- Some mutual fund investors have the misconception that management fees are set and regulated by the federal government, and that one company's fees are like another's. In fact, management fees are set independently by each mutual fund company. The impact of derivations in fees can be quite significant over time.

-- For example, assume a 10 percent return on an initial investment of $25,000. A mutual fund with an annual management fee of 1.3 percent will yield $31,700 LESS over 20 years than a mutual fund with a management fee of just 0.2 percent, all other things being equal. That's a lot of foregone retirement savings!

Information concerning a fund's management fees is always available by contacting the fund company or referring to the fund's investment prospectus.

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[topic 11]

Watch for Hidden Fees

The U.S. Labor Department is currently auditing 401k plans of all sizes because of a trend that may violate current pension laws. Many companies, especially smaller businesses, are shifting plan administrative expenses to plan participants, knowingly or unknowingly. This shift of plan expenses come in the form of "hidden fees" that are routinely deducted from each participants' retirement savings by some plan providers and mutual funds. Because of lax reporting requirements, no one really knows how much money changes hands behind the scenes, but it is estimated that excessive fees may be as much as $1.5 billion per year, and growing.

In the 401k arena, expense fee disclosure, whether to plan participants or plan sponsors, has been notoriously confusing and unclear. The impact of these confusing hidden fees on plan participants' retirement accounts can be very significant over time. As example, consider a hypothetical 401k investment such as a mutual fund, with deducted expense fees of 1.3 percent versus one with fees of just .3 percent. Applied to an initial 401k investment of $5,000, with regular annual investments of $5,000 returning 10 percent and compounded over 15 years, the difference between the "low-fee" investment and the "high-fee" investment adds up to $15,398 -- a significant sum that 401k plan participants could unwittingly be missing out on.

Policymakers and plan sponsors seeking to structure well-managed 401ks for their aging workforces are beginning to acknowledge the negative impact hidden fees has on eroding pension accumulations for retirement. What might appear to be a small difference in deducted investment fees can result in substantial differences in eventual retirement benefits.

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[topic 12]

Our Policy Regarding All Asset-Based Fees

We at Easytec Systems, distributor of Web 401k and 401(k) Easy for the PC, work hard to make 401k plans affordable to our clients, many of whom comprise small and very small companies.

We do not accept any rebates or revenue sharing of fees deducted from our clients' plan assets unless those fees can be returned to the clients' plans or used by Easytec to offset plan expenses. Other entities that provide and support 401k plan investments -- mutual fund managers, fund distributors, asset custodians, asset trustees, investment brokers and advisors, and plan administrators and record-keepers -- typically earn at least a portion of their compensation from asset-based fees deducted from plan assets.

Web 401k is the exception to the norm: We do not earn any compensation -- directly or indirectly -- from our clients' 401k plan assets. In cases where rebates are offered, we have the rebates returned to our clients or directly applied to reducing our clients' costs. Our published prices, available online for all to see, are the only net compensation we collect.

Asset-based fees are an unavoidable fact of life if your company uses mutual funds or self-directed brokerage accounts for its 401k. The cost of these asset-based fees should be factored in when determining the true, overall cost of your 401k -- and the cost savings of Web 401k returning such fees to clients when possible should be factored into the product's cost savings.

For more information on asset-based fees we recommend reading "Revenue Sharing in the 401(k) Marketplace--Whose Money Is It?" by The McHenry Consulting Group and Study of 401(k) Plan Fees and Expenses by the US Department of Pension Welfare and Benefits.

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