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Mutual Fund Investor Bill of Rights
Mutual Fund Investor Disclosure Statement
Before
investing in mutual funds, it is important that you understand
the sales charges, expenses, and management fees that you will
be charged, as well as the breakpoint discounts to which you
may be entitled. Understanding these charges and breakpoint
discounts will assist you in identifying the best investment
for your particular needs and may help you reduce the cost of
your investment. This disclosure document will give you general
background information about these charges and discounts. However,
sales charges, expenses, management fees, and breakpoint discounts
vary from mutual fund to mutual fund. Therefore, you should
discuss these issues with your Oppenheimer Financial Advisor
and review each mutual fund’s prospectus and statement
of additional information, which are available from your Oppenheimer
Financial Advisor, to get the specific information regarding
the charges and breakpoint discounts associated with a particular
mutual fund.
Sales Charges
Investors that purchase mutual funds must make certain choices,
including which funds to purchase and which share class is most
advantageous. Each mutual fund has a specified investment strategy.
You need to consider whether the mutual fund’s investment
strategy is compatible with your investment objectives. Additionally,
most mutual funds offer different share classes. Although each
share class represents a similar interest in the mutual fund’s
portfolio, the mutual fund will charge you different fees and
expenses depending upon your choice of share class. As a general
rule, Class A shares carry a “front-end” sales charge
or “load” that is deducted from your investment at
the time you buy fund shares. This sales charge is a percentage
of your total purchase. As explained below, many mutual funds
offer volume discounts to the front-end sales charge assessed
on Class A shares at certain pre-determined levels of investment,
which are called “breakpoint discounts.” In contrast,
Class B and C shares usually do not carry any front-end sales
charges. Instead, investors that purchase Class B or C shares
pay asset-based annual service fees, which may be higher than
those charges associated with Class A shares.
Investors that purchase Class B and C shares may also be required
to pay a sales charge known as a contingent deferred sales charge
(“CDSC”) when they sell their shares, depending upon
the rules of the particular mutual fund. In some instances,
the CDSC may equal the front-end sales charge applicable to
A shares. Generally, B shares are more inexpensive for investors
with an intermediate to long-term time horizon and less than
$100,000 to invest. C shares can be more expensive for investors
over the long term. In order to compare the expenses associated
with each type of share class, please review the FINRA ’s
Expense Analyzer available at www.finra.org.
Some fund companies also make their funds available through
other share classes with different fee structures, including
funds without sales charges, or no-load funds. In addition,
some funds may be available through Oppenheimer fee-based programs
or accounts. Clients do not pay sales charges in these accounts;
instead they offer mutual funds via an asset based annual fee.
Breakpoint Discounts
Most mutual funds offer investors a variety of ways to qualify
for breakpoint discounts on the sales charge associated with
the purchase of Class A shares. In general, most mutual funds
provide breakpoint discounts to investors who make large purchases
at one time. The extent of the discount depends upon the size
of the purchase. Generally, as the amount of the purchase increases,
the percentage used to determine the sales load decreases. In
fact, the entire sales charge may be waived for investors that
make very large purchases of Class A shares. Mutual fund prospectuses
contain tables that illustrate the available breakpoint discounts
and the investment levels at which breakpoint discounts apply.
Additionally, most mutual funds allow investors to qualify for
breakpoint discounts based upon current holdings from prior
purchases through “Rights of Accumulation,”
and future purchases, based upon “Letters of Intent.”
This document provides general information regarding Rights
of Accumulation and Letters of Intent. However, mutual
funds have different rules regarding the availability of Rights
of Accumulation and Letters of Intent. Therefore,
you should discuss these issues with your Oppenheimer Financial
Advisor and review the mutual fund prospectus to determine the
specific terms upon which a mutual fund offers Rights of
Accumulation or Letters of Intent.
Rights of Accumulation
Many mutual funds allow investors to count the value of
previous purchases of the same fund, or another fund within
the same fund family, with the value of the current purchase,
to qualify for breakpoint discounts. Moreover, mutual funds
allow investors to count existing holdings in multiple accounts,
such as IRAs or accounts at other broker-dealers, to qualify
for breakpoint discounts. Therefore, if you have accounts at
other broker-dealers and wish to take advantage of the balances
in these accounts to qualify for a breakpoint discount, you
must advise your Oppenheimer Financial Advisor about those balances.
You may need to provide documentation establishing the holdings
in those other accounts to your Oppenheimer Financial Advisor
if you wish to rely upon balances in accounts at another firm.
In addition, many mutual funds allow investors to count the
value of holdings in accounts of certain related parties, such
as spouses or children, to qualify for breakpoint discounts.
Each mutual fund has different rules that govern when relatives
may rely upon each other’s holdings to qualify for breakpoint
discounts. You should consult with your Oppenheimer Financial
Advisor or review the mutual fund’s prospectus or statement
of additional information to determine what these rules are
for the fund family in which you are investing. If you wish
to rely upon the holdings of related parties to qualify for
a breakpoint discount, you should advise your Oppenheimer Financial
Advisor about these accounts. You may need to provide documentation
to your Oppenheimer Financial Advisor if you wish to rely upon
balances in accounts at another firm.
Mutual funds also follow different rules to determine the value
of existing holdings. Some funds use the current net asset value
(NAV) of existing investments in determining whether an investor
qualifies for a breakpoint discount. However, a small number
of funds use the historical cost, which is the cost of the initial
purchase, to determine eligibility for breakpoint discounts.
If the mutual fund uses historical cost, you may need to provide
account records, such as confirmation statements or monthly
statements, to qualify for a breakpoint discount based upon
previous purchases. You should consult with your Oppenheimer
Financial Advisor and review the mutual fund’s prospectus
to determine whether the mutual fund uses either NAV or historical
costs to determine breakpoint eligibility.
Letters of Intent
Most mutual funds allow investors to qualify for breakpoint
discounts by signing a Letter of Intent, which commits the investor
to purchasing a specified amount of Class A shares within a
defined period of time, usually 13 months. For example, if an
investor plans to purchase $50,000 worth of Class A shares over
a period of 13 months, but each individual purchase would not
qualify for a breakpoint discount, the investor could sign a
Letter of Intent at the time of the first purchase and receive
the breakpoint discount associated with a $50,000 investment
on the first and all subsequent purchases. Additionally, some
funds offer retroactive Letters of Intent that allow investors
to rely upon purchases in the recent past to qualify for a breakpoint
discount. However, if an investor fails to invest the amount
required by the Letter of Intent, the fund is entitled to retroactively
deduct the correct sales charges based upon the amount that
the investor actually invested. If you intend to make several
purchases within a 13-month period, you should consult your
Oppenheimer Financial Advisor and the mutual fund prospectus
to determine if it would be beneficial for you to sign a Letter
of Intent.
As you can see, understanding the availability of breakpoint
discounts is important because it may allow you to purchase
Class A shares at a lower price. The availability of breakpoint
discounts may save you money and may also affect your decision
regarding the appropriate share class in which to invest. Therefore,
you should discuss the availability of breakpoint discounts
with your Oppenheimer Financial Advisor and carefully review
the mutual fund prospectus and its statement of additional information,
which you can get from your Oppenheimer Financial Advisor, when
choosing among the share classes offered by a mutual fund. If you wish to learn more about mutual fund share classes or breakpoints, review the investor alerts on the FINRA Web site http://www.finra.org/InvestorInformation/InvestorAlerts or visit the many mutual fund Web sites available to the public.
Market Timing and Late Trading
Market timing is the frequent trading of mutual fund shares
in order to take advantage of pricing inefficiencies or market
movements. Market timing also includes executing mutual fund
trades that would be contradictory to a funds prospectus.
Late trading refers to knowingly or recklessly effecting mutual
fund transactions that are based on a net asset value (NAV)
computed prior to the time the order to purchase or redeem was
received from the customer. Investment Company Act Rule 22c-1(a)
generally requires that redeemable securities of investment
companies be sold and redeemed at a price based on the NAV of
the fund computed after the receipt of orders to purchase.
The Firm prohibits the use of market timing as a method of mutual
fund trading and the occurrence of after-close mutual fund transactions.
Please note that legitimate orders placed close to or at the
close of business but entered after the market’s close
in certain circumstances are allowed; however, Oppenheimer Financial
Advisors must be able to substantiate that such orders were
not conducted so as to effect a late trade as defined above.
Revenue Sharing
The statistical and other information described below pertains
to mutual fund sales transacted through traditional private
client accounts. It is not applicable to and does not include
information pertaining to mutual fund purchases through Oppenheimer
Asset Management’s fee-based Portfolio Advisory Service
(PAS) account.
Oppenheimer & Co. Inc (Oppenheimer) seeks to collect a mutual
fund support fee, or what has come to be called a “revenue-sharing
payment”, for marketing, training, operations and systems
support. Fund companies participating in this arrangement are
considered “Strategic Partners”. For a list of Oppenheimer's
Strategic Partners, please click
here.
Revenue-sharing payments from Strategic Partners are in addition
to the sales charges, annual service fees (referred to as "12b-1
fees"), applicable redemption fees and deferred sales charges,
and other fees and expenses disclosed in a fund's prospectus
fee table. Revenue-sharing payments, however, are paid out of
the investment adviser's or other fund affiliate's assets and
not from the fund's assets. Moreover, no portion of these payments
to Oppenheimer is made by means of brokerage commissions generated
by the fund and no portion of these payments is directed or
allocated to Oppenheimer Financial Advisors.
Oppenheimer may enter into these types of revenue-sharing agreements,
calculated quarterly, and based upon the quarter-end value of
our clients' fund holdings and mutual fund sales. It is important
to note that our Financial Advisors receive absolutely no additional
compensation as a result of these revenue-sharing payments.
In addition, companies other than Strategic Partners may send
payments in recognition of Oppenheimer’s efforts to provide
Financial Advisors with additional sales, marketing and educational
opportunities as permitted by industry rules.
The information provided herein is general in nature for informational
purposes only and does not represent legal or tax advice. Oppenheimer
& Co. Inc does not provide legal or tax advice. The material
herein has been obtained from various sources believed to be
reliable but is not guaranteed by us as to accuracy or authenticity
and is subject to change without notice. The most current version
of this notice shall be posted on the Firm’s Web site www.opco.com.
Oppenheimer Asset Management is the name under which Oppenheimer
Asset Management Inc. (OAM) operates. OAM is a wholly owned
subsidiary of Oppenheimer Holdings Inc., which also wholly owns
Oppenheimer & Co. Inc (Oppenheimer), a registered broker/dealer
and investment adviser. Securities are offered through Oppenheimer.
Investors should consider the investment objectives, risks and charges of the Investment Company carefully before investing.
The prospectus contains this and other information. Your Oppenheimer Financial Advisor can provide you with a prospectus;
please obtain one and read it carefully before investing. |
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