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For Client Purposes |
Mutual Fund Investment and Compensation DisclosureInvesting in Mutual Funds at Birkelbach Investment Securities, Inc
Mutual Funds may provide an attractive way for investors to meet their financial
objectives. As with any investment, when investing in mutual funds it is important
to consider the risks and objectives of a particular mutual fund and match them
to your own investment objectives and risk tolerance. It is also important to
understand the costs associated with investing in mutual funds and how Birkelbach
Investment Securities, Inc. and your registered representative are compensated
on your investment. Mutual Fund Share Classes
Many mutual funds impose a sales charge at the time of purchase that is paid
from and reduces the amount invested. While others may charge a fee at the time
the shares are sold. These charges are sometimes referred to as "sales
loads." The sales load will vary from fund company to fund company, and
may also vary for different funds within the same family of funds. A part of
the sales load is paid to OneAmerica Securities, Inc. and your registered representative.
The compensation paid by OneAmerica Securities, Inc. to its registered representatives
for the sale of mutual funds does not favor one fund or fund family over another. Class A SharesClass A shares typically have a sales load that is paid by the investor at the time the fund is purchased. The amount of the sales load is expressed as a percentage of the mutual fund's public offering price and is deducted from the amount invested when purchased. Sales charges are typically up to 4.5 percent for fixed income funds and 5.75 percent for stock funds. For larger investment amounts, sales load discounts, also known as "breakpoints" may reduce the amount of the sales load paid. Investors in Class A shares will also pay ongoing expenses charged by the mutual fund. Class B Shares
Class B shares are not assessed an initial sales load at the time of purchase,
allowing the entire purchase amount to be invested in the fund. However, if
you sell your mutual fund shares within a predetermined time period, you will
be assessed a charge called a "Contingent Deferred Sales Charge" or
CDSC. The time period is typically 4 - 8 years with an amount up to 5.00 percent.
The amount of the CDSC declines the longer you own your shares. Class B shares
have higher ongoing internal expenses than Class A shares that will reduce your
returns by the amount the Class B share internal expenses exceed the Class A
internal expenses. Usually when the CDSC time period expires, the Class B shares
convert to Class A shares allowing you to pay the lower Class A ongoing internal
expenses. Class C SharesClass C shares usually do not pay an initial sales load and may assess a CDSC, if sold within a short period of time, typically 12 to 18 months from purchase. The CDSC for Class C shares is usually a maximum of 1.00 percent. Class C shares charge higher internal expenses than Class A shares. Class C shares do not convert to Class A shares so that the higher internal expenses continue throughout your ownership. Class C shares typically have the highest internal expenses. Sales Load Discounts, Rights of Accumulation and Letters of IntentMost mutual fund families offer reduced sales loads for Class A shares purchased in the same fund family, if certain investment levels are met. These reduced sales loads or discounts are referred to as "breakpoints." For example a fund charging 5.5 percent may reduce the sales load to 5.00 percent for amounts of $50,000.00 or more, and further reduce the sales load at $100,000.00, $250,000.00 and so on. Many mutual fund families also allow investors to aggregate their holdings with other accounts held by the investor or certain family members to also qualify for breakpoint discounts. These discounts for aggregating holdings are known as "rights of accumulation." In addition, many funds also allow for discounts where a commitment is made to purchase a predetermined amount over certain periods of time, usually 13 months, to also qualify for a breakpoint discount. This is known as a "letter of intent." If the investor does not meet the committed amount, within the time period, the breakpoint discount will be reversed by the fund company by selling enough of the investor's fund holdings to meet the difference. Because many investors or qualifying family members own mutual funds through more than one source, it is important to inform your registered representative of these holdings to help determine if you qualify for any breakpoint discounts. How Mutual Fund Compensation is Paid to Birkelbach Investment Securities, Inc. and Your Registered Representative.
Birkelbach Investment Securities, Inc. and our registered representatives receive
compensation when clients invest in mutual funds. Depending upon the mutual
fund share class, compensation may be a sales load paid when purchased, a concession
from a mutual fund company, ongoing asset based sales charges known as "trails"
and commonly referred to as 12b-1 marketing support and servicing fees or an
investment management fee if mutual funds are purchased in a fee-based account. The mutual fund companies or their distributors that paid Birkelbach Investment Securities, Inc. marketing and support compensation for 2010 is available upon request. Contact the compliance department of Birkelbach Investment Securities, Inc. at 312-853-2820. Additional Information
You should discuss your particular needs with your registered representative
to determine the fund that may be best suited for your investment needs. |