ARLINGTON, Va. -- The National Telephone Cooperative Association trustee committee added nine mutual funds as investment options in its defined contribution plan, and moved to daily valuation from quarterly.
Previously the $600 million combined profit sharing and money purchase plan with 401(k) feature offered four separate account investment options.
"We wanted to modernize the 401(k) to give more choices and more options for members," said Michael E. Brunner, the organization's chief executive officer.
The NTCA, a trade association of 500 rural telephone companies, also has a $1 billion defined benefit plan. No changes to that plan are anticipated by the trustee committee which administers the plans, Mr. Brunner said.
NTCA's Retirement and Security ProgramSavings Plan Trustees hired Fidelity Investments Tax-Exempt Services Co., Boston, for its record-keeping platform and to provide the new investment options to the 12,000 participants in the NTCA Savings Plan, said Roland Arrington, vice president of benefits and trust fund administration for NTCA. The transition was completed in June.
The association will collect the investment data from the participating companies, scrub it, reconcile the information and feed it to Fidelity, Mr. Arrington said. The association will continue to administer the 401(k) plan and retain some of the communication and tracking duties.
The new investment options supplied by Fidelity or its alliance partners are Fidelity's aggressive growth, dividend growth, low priced stock, diversified international, S&P 500 and extended market index funds; Algier Small Cap Retirement fund; and PIMCO Bond fund, Mr. Arrington said.
Fidelity, which previously managed one of the four separate account options -- synthetic GICs -- will retain that account.
In all, participants now have a total of 12 investment options from which to choose, Mr. Brunner said.
As for the other former investment options, NTCA is switching the assets in a tactical allocation account investing in stocks, bonds and cash that had been run by Brinson Partners, a member of UBS Asset Management, Chicago, to the Fidelity Puritan fund, Mr. Arrington said. Deutsche Asset Management, New York, will continue to run an international passively managed equity separate account benchmarked to the Morgan Stanley Capital International All Country World index, he said. A large-cap value portfolio that had been managed by Delaware Investments, Philadelphia, will be run by Fidelity.
Wilshire Associates, Santa Monica, Calif., is the association's investment consultant and assisted with the range and selection of investment options.
"The members want more choices in the 401(k)," said Mr. Brunner. "I would argue investors who can trade daily do not do better than people that can't, but members wanted more choices."
Participants also wanted to be able to look up their investment choices in the newspaper, Mr. Arrington said. Including mutual funds in the mix of investment options made this possible, he said.
Part of what NTCA will get from Fidelity is access to the Internet, which the association could not provide participants before, Mr. Brunner said. Access to online services is necessary for reaching participants in diverse locations effectively, Mr. Brunner said. Among the Internet services to be supplied by Fidelity are its education and planning tools, he added.
"Our participants had gotten sophisticated enough that a significant minority wanted to move money more frequently than quarterly, wanted more investment options and wanted some additional investment planning," Mr. Arrington said. "We're getting asset allocation and investment profiling as part of Fidelity's Internet package. We found that very attractive."
Instead of individuals chasing returns, participants will be able to do profiling and figure out how much risk they can endure before making investment changes, Mr. Arrington said.
"I think our sense was that in many cases our participants that were active tended to chase returns," he said. "One of the things we wanted to accomplish was to get participants planning tools for their eventual retirement and then make choices."