REG BI Fee Disclosure
Mutual Funds
(Note: Not Required for advisory account transactions.)
Mutual Funds Commissions and Expenses:
Class A Shares – The up-front sales charges paid to your Financial Professional for Class A shares typically range from 2.00% to 5.00%. The sales charge is paid out of your mutual fund purchase, thus reducing the principal amount invested. Unlike Class C shares, Class A shares offer Breakpoints. See page 2 of this Disclosure and the mutual fund prospectus for more information about Breakpoints.
In addition to the up-front sales charge, your Financial Professional will be paid an ongoing fee based on the value of your mutual fund. This ongoing fee is referred to as a 12b-1 fee or trailing commission and is typically .25% of the value of your investment for the life of your investment.
Expense ratios of a Class A mutual fund range from 0.31% to 37.11% with an average expense ratio of 1.40%
See Internal Expense Ratio Guide on page 2 of this disclosure document.
Class C Shares – C share mutual funds typically pay the financial professional a 1% up front commission and ongoing annual 12b-1 fee compensation of 1% for 10 years and up until you either sell the mutual fund or transfer it to another financial professional. Class C share mutual funds do not offer breakpoint discounts.
The underlying expenses charged to Class A shares are usually are lower than C shares, compensating for the high upfront commissions this category pays. C shares tend to pay the maximum 1% and, since ongoing 12b-1 fees to your Financial Professional figure into the mutual fund’s overall expense ratio, the annual expense ratio can rise above 2% for the Class C shareholder.
Because the annual fee, also referred to as the underlying expenses or expense ratio can compound investor cost over time, Class C shares are best suited for those looking to hold fund shares for periods of 3 years or less.
Class C share mutual funds expense ratio range from 0.88% to 57.89% annually with an average expense ratio of 2.11%.
See Internal Expense Ratio Guide on page 2 of this disclosure document.
Unlike A shares, Class C shares do not have front-end loads, but they often carry small back-end loads, officially known as a contingent deferred sales charge (CDSC). A CDSC is typically 1% and it usually vanishes after the mutual fund is held for a year.
| Pros | Cons |
| No upfront commission – entire deposit is invested | High expense ratios |
| No back-end sales charge after one year | Back-end load of first year withdrawals |
| Good intermediate-term (1-3 years) investment | Not a good investment for a buy and hold strategy |
Breakpoints –
Class A mutual funds have different ways of charging fees and expenses to investors. Investors who buy Class A shares of a mutual fund usually pay a front-end sales charge or load. Frequently Class A mutual funds offer discounts that reduce and sometimes even eliminate this front-end sales charge for larger investments. Breakpoints are the investment amounts at which a fund offers investors these sales charge discounts. The more you invest, the greater the discount to which you may be entitled. Refer to the mutual fund prospectus for more information about fund feature and expenses.
What a Sample Breakpoint Schedule Looks Like
Breakpoint discounts usually start at investment levels of $50,000, but may begin at $25,000. Here’s a sample breakpoint schedule:
| Your Investment | Your Sales Charge |
| Less than $25,000 | 5.00% |
| At least $25,000, but less than $50,000 | 4.25% |
| At least $50,000, but less than $100,000 | 3.75% |
| At least $100,000, but less than $250,000 | 3.25% |
| At least $250,000, but less than $500,000 | 2.75% |
| At least $500,000, but less than $1 million | 2.00% |
| $1 million or more | No sales charge |
Annual Mutual Fund Internal Expenses (Expense Ratio) An expense ratio is an annual fee expressed as a percentage of your investment — or, like the term implies, the ratio of your investment that goes toward the fund’s expenses. If you invest in a mutual fund with a 1% expense ratio, you’ll pay the fund $100 per year for every $10,000 invested.
Internal Expense Ratio Guide
The example below shows internal fees for mutual funds that are compounded so you can see the effect of that compounding and the impact on your expected returns. The amount you will pay will reduce the amount of your return by a like amount. This example assumes a $10,000 account that you earn a 5% return each year and fees are deducted at the beginning of each quarter. Although your actual costs may be higher or lower, based on these assumptions your fees would be:
| Fee | 1.00% Fee | 1.25% Fee | 1.50% Fee | 1.75% Fee | 2.00% fee |
| 1 Year | $102.00 | $127.00 | $152.00 | $178.00 | $203.00 |
| 3 Year | $317.00 | $396.00 | $476.00 | $555.00 | $634.00 |
| 5 Year | $550.00 | $688.00 | $825.00 | $963.00 | $1,101.00 |
| 10 Year | $1,221.00 | $1,527.00 | $1,832.00 | $2,137.00 | $2,443.00 |
Mutual Funds Trading Costs
- The trading (administrative) charges you pay to buy a mutual fund in a Pershing or NFS account range from $0 to $4.25
- The trading (administrative) you pay to sell a mutual fund in a Pershing or NFS account range from $0 to $4.25
- The trading (administrative) charges you pay to exchange a mutual fund in a Pershing or NFS account range from $0 to $8 for the entire transaction.