The reason for the difference is that Retirement Resource is a trust program which is created in conjunction with a qualified retirement plan to own and manage plan assets. Each plan participant does not own individual mutual fund shares. They own units as a proportionate interest of the plan’s assets.
Nationwide uses daily unit accounting to calculate a plan’s asset value in the recordkeeping of the Retirement Resource program, which uses units and unit values as a basis. While units and the unit values are not the same as shares and share NAVs as reported by mutual fund companies, the recordkeeping result of the underlying fund performance is the same.

Nationwide uses unit value accounting because:

• It has the flexibility needed to recordkeep the various features and alternative investments in the program
• It’s more efficient to account for the treatment of dividend and capital gain distributions at the fund level, as
the unit accounting method does, than to do so at the participant level with share additions.

Custodial and trust reports are produced using share accounting. This means that to obtain the plan’s market value, we multiply the number of shares the trust owns by the NAV (less the asset management charge) to obtain the plan’s market value.

If you or one of your clients is interested in seeing the formula used to calculate Net Asset Value to Unit Value, Nationwide has a publication which further explains unitization and gives a step-by-step formula for this calculation. To receive a pdf copy, email Mike Rogers.

Manning & Napier Team Nominated for Morningstar’s Manager of the Decade Award

Morningstar recently unveiled its list of nominees for its first-ever Fund Manager of the Decade award. Winners in three broad asset classes will be announced in January. Among those nominated in the international fund realm is the team which manages Manning & Napier’s World Opportunities Fund.

Manning & Napier’s Investment Philosophy Leads Their Target Date Funds to Outperform Peers

Manning & Napier recently released a paper comparing the performance of its target date life cycle retirement funds to its peer universe over the current market cycle.

• A plan participant who had $100,000 in Manning & Napier’s 2030 Target Date Fund in October of 2002 (defined as the start of the current market cycle) would have had an ending balance of $201,758 at the end of September, 2009.
• By comparison, $100,000 invested in the Target Date 2026 – 2035 Universe Median would have had an
ending balance of $151,006.

These results make it clear that all Target Date Funds, even those managed toward the same target retirement date, are not created equal. The paper lists six factors plan sponsors should analyze before choosing a target date retirement fund:

1. Experience in Life Cycle Investing through a Complete Market Cycle
The reason it’s important to consider performance over a complete market cycle (currently defined as the
period from 10/1/02 through 9/30/09) is that more conservative managers may have an advantage during
a down market, while aggressive managers may have an advantage during strong markets. Tracking
performance over a complete market cycle gives insight as to management’s ability to preserve capital in
down markets and participate in up markets.

2. Asset Allocation and Glide Path Decisions
Plan sponsors should look for a fund with an active approach to asset allocation and a dynamic glide path.
An active approach to asset allocation means the fund manager seeks to maximize risk-adjusted returns
through proactive portfolio adjustments based on changing market conditions, rather than a fixed equity/
bond mix and generally static exposure to various sub-asset classes regardless of the economic or market
environment.

Glide path refers to the feature of target date funds that adjusts the mix of stocks and bonds to become
more conservative as the target retirement date approaches. A dynamic glide path gives the fund manager
the flexibility to adjust the portfolio’s equity/bond mix to fundamental changes in the market environment,
as well as systematically shifting to a generally more conservative range as the time until the target date
shortens.

3. Portfolio Diversification and Coordination
For inexperienced investors, it’s easy to make the assumption that diversification is achieved by having
a large number of funds and securities inside the fund. However, the fact is that having an extremely
large number of funds and resulting securities can lead to significant overlap of securities, higher levels of
aggregate cash as a result of multiple managers, and uncoordinated sector/industry weightings.

Manning & Napier’s Retirement Target Institutional Collectives hold one or two Manning & Napier risk-based
collectives, which enables the management team to make coordinated buy and sell decisions. The active
approach to asset allocation allows the management team to find opportunities that are attractively valued
regardless of capitalization, sector or country. The investment approach allows flexibility to include exposure
to non-traditional asset classes if these types of securities are attractively priced, but does not require
maintaining a minimum exposure to speculative asset classes/securities regardless of market conditions.

4. Security Selection
Manning & Napier uses a bottom-up approach to stock selection, analyzing securities on an individual basis
for their relative strengths, attractive valuations and adherence to one of three proven investment strategies.
The active approach to security selection provides the flexibility to protect capital in negative market
environments, as well as to participate in positive markets.

Some companies use an index-based approach to life cycle investing which often results in limited risk management during difficult market environments.

5. Reasonable Expenses
According to the September 30, 2009 release of the Morningstar Direct database, the average expense ratio for the life cycle mutual fund universe was 1.17%. The expense ratio for the six Manning & Napier Retirement Target Institutional Collectives is .69%.

When evaluating expenses, plan sponsors should analyze them relative to the value obtained. The Manning
& Napier Target Date Funds have a proven track record of adding value over a complete market cycle.

6. Portfolio Statistics and Performance
A comparison of Manning & Napier’s annualized performance as compared to its peer group shows that
its target date funds have outperformed the others for all five retirement target dates, as well as for the
retirement income fund into which participants are placed once they have reached their retirement date.

The bottom line is, you have the best target date retirement funds in the business in your arsenal. The
numbers tell the story – a story you can tell your clients and prospects.

Fringe Benefit Group in the News

ABC Webinar

Adam Bonsky, Executive VP of Government Markets, and Karen deMontigny, Northeast RVP, are presenting a national webinar for members of the Associated Builders and Contractors (ABC) Tuesday, December 9th at 11 a.m. Eastern Time. The ABC is the largest association of merit shop contractors, with nearly 25,000 members and 78 chapters nationwide. The webinar, “How to Bid More Effectively on Government Contracts, is free to ABC members and covers:

• Understanding compliance issues and regulations to bid more competitively on prevailing wage projects
• Reducing payroll taxes and insurance costs on public work
• Creating significant tax savings for company owners and the business as a whole
• Easing bonding challenges
• Better managing business risk and cash flow volatility
• Compliance with increased enforcement on public work

If you have clients who are ABC members, they can register for this free webinar here. Remember, we are ABC business partners, and ABC members get a discount on our plans. You can direct your clients who are ABC members to this page to receive the discount.

Trade Show Schedule

Here’s a list of upcoming trade shows where we’ll be exhibiting and/or presenting:

World of Concrete
Las Vegas, Nevada
February 1-5, 2010

Associated Builders and Contractors, Inc. National Convention 2010
Hilton San Diego and San Diego Convention Center, San Diego, CA
February 3-7, 2010

PACE Painting & Coatings Expo 2010 (Presenting)
Phoenix, Arizona
February 7 - 10, 2010