You have many funds to choose from when it comes to investing your money. Once you choose a fund, you may also need to choose among the fund’s different share classes, each of which features a different cost structure. It’s important to understand how mutual fund fees and expenses, and your choice of share class, affect your investment and return. Of course, you also need to consider the fund’s investment objectives and policies, and its risks.
Summarized below is some important information about mutual fund share classes and the types of fees and expenses you may be required to pay depending upon the share class you select. This summary also explains how Morgan Stanley Smith Barney and your Financial Advisor are compensated when you invest in mutual funds. You can visit the Web sites sponsored by the U.S. Securities and Exchange Commission (
www.SEC.gov), the Financial Industry Regulatory Authority (
www.sifma.org), the Securities Industry and Financial Markets Association (
www.sifma.org) and the Investment Company Institute (
www.ICI.org) to obtain additional educational information about mutual funds.
The following information principally pertains to mutual fund sales transacted through commission-based brokerage accounts. For more information on fees and expenses in our fee-based advisory account programs, please refer to our advisory program disclosure documents. You should consider all the available methods for purchasing and holding mutual fund shares discussed in this booklet and in your program documents.
Note: Before buying any mutual fund, request a prospectus from your Financial Advisor and read it carefully. The prospectus contains important information on fees, charges and investment objectives which should be considered carefully before investing.
Mutual funds are securities that are offered for sale through a prospectus. First and foremost, before
investing in a mutual fund, you should read the fund's prospectus carefully. You can also request a copy of the
fund's Statement of Additional Information ("SA"), if needed, for additional details.All funds charge investment management fees and
ongoing expenses for operating the fund that you will pay as long as you are invested. A fund’s prospectus describes, among other things, the fund’s investment objective and principal strategy, risks, share classes and expenses. The prospectus and SAI also describe how sales charges and expenses vary by share class, and how investors can qualify for sales-charge reductions based upon the amount of their investments or other circumstances. Of course, in choosing a mutual fund investment, you should consider the fund's investment objectives and policies, and its risks - not just the costs and expenses of investing in a particular fund and
share class. Determine if they match your own goals. Your Financial Advisor can provide assistance if you have questions.
Each Mutual Fund Is Different
Mutual funds are securities that are offered for sale through a prospectus. First and foremost, before
investing in a mutual fund, you should read the fund's prospectus carefully. You can also request a copy of the
fund's Statement of Additional Information ("SA"), if needed, for additional details.
All funds charge investment management fees and ongoing expenses for operating the fund that you will pay as long as you are invested. A fund’s prospectus describes, among other things, the fund’s investment objective and principal strategy, risks, share classes and expenses. The prospectus and SAI also describe how sales charges and expenses vary by share class, and how investors can qualify for sales-charge reductions based upon the amount of their investments or other circumstances. Of course, in choosing a mutual fund investment, you should consider the fund's investment objectives and policies, and its risks - not just the costs and expenses of investing in a particular fund and
share class. Determine if they match your own goals. Your Financial Advisor can provide assistance if you have questions.
Fund-Transfer Restrictions
Certain mutual funds may not be transferable from an account at one brokerage firm to an account at other brokerage firms. A common factor limiting transferability is when a fund or its principal distributor does not have a selling or other agreement in place with
the other brokerage firm. If a particular fund family’s funds are not transferable to another brokerage firm, you may have the following options: leave the position in an account at the original brokerage firm; or have the position re-registered in your name on the books and records of the fund company or its transfer agent. As an alternative, you may liquidate the position and transfer
the proceeds. This option may have tax implications and/or other costs. For further information regarding the transferability of a particular fund’s shares, please refer to the fund’s Prospectus and SAI, or call your Financial Advisor.
The Basics of Mutual Fund Share Classes
A single mutual fund usually offers different pricing arrangements or “classes” of its shares to meet investor preference and needs. The most common mutual fund share classes available in commission-based brokerage accounts —A, B and C—are described below. Each share class represents investments in the same mutual fund portfolio but offer investors a choice of how and when to pay for fund distribution costs. Fund families may also offer specialized share classes such as Class R shares designed for retirement plan accounts. In addition, many funds utilize “no-load” share classes – typically offered with no front-end or back-end sales changes – but these share classes are generally only available in MSSB’s feebased advisory account programs. Please refer to the advisory program documents for more information on fees and expenses for these accounts.
The key distinctions among share classes are the sales charges and ongoing fees and expenses you may pay in connection with your investment in the fund. The compensation received by your Financial Advisor for selling you shares of the fund also will be directly affected by the share class you purchase.
Your Financial Advisor is available to help you decide which class of shares is generally the most economical for you. Morgan Stanley Smith Barney also employs share class limits and other tools to assist with the share class selection process. You may also refer to the information provided below. The principal considerations are the size of your investment and the anticipated holding period.
Investors generally should purchase Class A shares (the initial sales charge alternative) or Class B shares (the deferred sales charge alternative) if they expect to hold the investment over the long-term (typically, five years or more). Class C shares (the level sales charge alternative) are generally appropriate for shorter-term holding periods.
Investors anticipating large purchases should consider Class A rather than Class B shares since the former typically offer sales-charge discounts (“breakpoints”) beginning at $25,000 that increase as the size of your investment increases. Shorter-term investors
anticipating very large purchases (typically $500,000 and above) should also consider Class A rather than Class C shares due to the significant breakpoint discounts available at those investment levels.
When deciding which fund and which share class within a fund makes the most economic sense for you, you should ask your Financial Advisor about the effect of a number of factors on your costs, including:
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How long you plan to hold the fund;
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The size of your investment;
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Whether you will be adding to the investment in the future;
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The expenses you’ll pay for each class;
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Whether the amount of your initial or intended investment, together with other eligible fund investments, qualifies you for any sales-charge discounts (that is, whether you should execute a Letter of Intent, whether you are entitled to a Right of Accumulation, or whether you are entitled to a breakpoint discount); and
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Whether you will be selling other mutual fund shares to fund your investment (that is, whether you might qualify for a load-waived transfer or repurchase).
12b-1 Fees and Other Fees
12b-1 fees take their name from the Securities and Exchange Commission rule that created them. They are fees charged against your mutual fund assets on a continuing basis that cover marketing, distribution and shareholder services costs. 12b-1 fees may also be used, in part, to offset the amounts payable by the fund’s principal distributor as compensation to selling firms where the fund share class does not have a front-end sales charge. The portion of the 12b-1 fee that is used for distribution expenses is effectively an asset-based sales charge paid over time instead of charged as a frontend sales load.
The amount of the 12b-1 fee is charged as a percentage of the fund’s total assets attributable to the share class. A fund also deducts certain other ongoing fees from its assets to pay firms that provide various services to the fund, such as the fund’s investment advisor, transfer agent, custodian and administrator. 12b-1 fees, investment management fees and other ongoing expenses are described in the mutual fund’s prospectus Fee Table. These fees will vary from fund to fund and for different share classes of the same fund. You can use prospectus Fee Tables to help you compare the annual expenses of different funds.
Class A Shares
Purchasers of Class A shares are typically charged a front-end sales charge or commission (sales charges on mutual funds are also referred to as “loads”) that is included in the price of the fund shares. When you buy shares with a front-end sales charge, a portion of the money you invest is used to pay the sales charge. For example, if you invest $10,000 in a fund and the frontend
load is 5 percent, you would be charged $500, and the remaining $9,500 would be invested in the chosen fund. Class A share 12b-1 fees (generally 0.25% or $25 per $10,000.00 of fund assets per year) typically are lower than those of Class B or C shares. Funds may offer purchasers of Class A shares volume discounts—also called breakpoint discounts—on the front-end sales charge if the investor:
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Makes a large purchase;
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Holds other mutual funds offered by the same fund family;
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Commits to purchase additional shares of the fund; or
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Has family members (or others with whom they may link purchases according to the prospectus) who hold funds in the same fund family.
How Breakpoints Work
When you purchase Class A shares at or above a
“breakpoint,” you are entitled to pay a reduced front-end
sales charge. For example, suppose the prospectus says
that a breakpoint occurs when you purchase $50,000
or more of Class A shares. If you buy less than $50,000
worth of shares, the sales charge is 5.75%. If you buy
$50,000 or more worth of shares, the sales charge is
4.50%. Now, suppose you buy $49,500 worth of Class A
shares. You would pay $2,846.25 in sales charges.
If you buy $50,000 of shares, you would pay only $2,250.
In this example, by choosing to invest an additional $500
you would actually pay $596.25 less in the front-end
sales charge, and those savings would increase your net
investment in the fund.
Mutual funds typically offer multiple breakpoints, each
at increasingly higher investment levels. Increasing your
investment size, if you are able and willing to do so, can
allow you to take advantage of higher breakpoints and
further reduce the sales charges you pay. It is important
that you understand how breakpoints work so that,consistent with your investment objectives, you can take
advantage of the lowest possible front-end sales charge.
Below is a typical breakpoint discount schedule showing
the front-end sales load applicable to a purchase of
Class A shares at different levels of investment. Different
funds and fund families may have different breakpoint
schedules.
Sample Breakpoint Schedule
| Class A Shares (Front-End Sales Load) |
|
| Investment Amount |
| Sales Load |
|
| Less than $25,000 |
5.00% |
| $25,000 or more but less than $50,000 |
4.25% |
| $50,000 or more but less than $100,000 |
3.75% |
| $100,000 or more but less than $250,000 |
3.25% |
| $250,000 or more but less than $500,000 |
3.75% |
| $50,000 or more but less than $100,000 |
2.75% |
| $500,000 or more but less than $1 million |
2.00% |
| $1 million or more |
0.00% |
Rights of Accumulation and Letters of Intent
What if you cannot immediately invest the amount
necessary to achieve a breakpoint discount? You still
might be able to qualify for a breakpoint discount
based on two different opportunities—called “rights of
accumulation” and “letters of intent.”
Rights of Accumulation
A right of accumulation (“ROA”) generally permits you
to accumulate or combine your existing fund family
holdings with new Class A purchases of the same
fund family’s funds for the purpose of qualifying for
breakpoints and associated discounts. For example, if
you are investing $10,000 in Class A shares of a fund
today, and you already own $40,000 in Class A shares
of that fund family, the fund may allow you to combine
those investments to reach a $50,000 breakpoint,
entitling you to a lower sales load on your $10,000
purchase today. Please refer to the fund prospectus for
details as rules may vary from fund family to fund family.
Letters of Intent
A letter of intent (“LOI”) is an agreement that expresses
your intention to invest an amount equal to or greater
than a breakpoint within a given period of time, generally
13 months after the LOI period begins. Many fund
companies permit you to include purchases completed
within 90 days before the LOI is initiated for the purpose
of obtaining a breakpoint discount. If you expect to make additional investments during the next 13 months in a
fund with a front-end sales load, it’s worth finding out if
an LOI can help you qualify for a breakpoint discount to
reduce your front-end sales charge.
Important Note: If you do not invest the amount stated
in your LOI during the 13 month period, the fund
can redeem a portion of the shares that you hold to
retroactively collect the higher sales charge that would
have applied to your purchase without the LOI.
Family and Related Account Discounts
Fund families typically permit you to aggregate fund
family holdings in other accounts that you and your
family may own, including fund assets held at other
brokerage firms, for the purpose of achieving a
breakpoint discount. For example, a fund may allow you
to qualify for a breakpoint discount by combining your
fund purchases with those of your spouse or minor
children. You also may be able to aggregate mutual fund
transactions in certain retirement accounts, educational
savings accounts or any accounts you maintain at
other brokerage firms. In some instances, employersponsored
retirement or savings-plan accounts may be
aggregated. These features vary among fund families.
Clients who currently hold accounts through both
the Morgan Stanley and Smith Barney channels
of Morgan Stanley Smith Barney may be eligible
to aggregate their mutual fund and 529 Plan
investments offered by the same fund company or
sponsor to qualify for breakpoints on new purchases.
When making any new mutual fund or 529 Plan
purchase, please inform your Financial Advisor of
any mutual fund or 529 Plan purchases or holdings
in the same fund family. If you have any questions
about the availability of sales charge discounts on
any mutual fund or 529 Plan purchases, please ask
your Financial Advisor.
Class B Shares
Investments in Class B shares typically are not subject
to a front-end sales charge, but purchasers normally
are required to pay a contingent deferred sales charge
(“CDSC”) on shares sold during a specified time period
(typically six years). In addition, Class B shares are
subject to higher 12b-1 fees (generally 1.00% or $100
per $10,000.00 of fund assets per year), which result in
higher ongoing expenses than Class A shares. The portion
of the 12b-1 fee that is used for distribution expenses is
effectively an asset-based sales charge paid over time
rather than a front-end sales charge applicable to Class
A share purchases. These charges allow the fund’s
distributor to recover its costs of distributing the fund.
Part of these costs include compensation, also known as
a “dealer concession”, paid by the fund’s distributor to
Morgan Stanley Smith Barney Financial Advisors. Dealer
concessions on equity funds are typically 4.5% of the
purchase price regardless of the size of the investment
since, unlike Class A shares, there are no breakpoint
discounts applicable to Class B shares.
The CDSC associated with an investment in Class
B shares declines over time, and in most funds is
eventually avoided entirely following the expiration of a
designated holding period. Upon the expiration of that
holding period, or shortly thereafter, Class B shares
typically “convert” into Class A shares, at which point
the investment will begin to be charged the Class A
shares’ lower 12b-1 fees. For these reasons, even though
they carry no front-end load, Class B shares are not, and
should not be viewed as, “no-load” shares.
It is important to bear in mind that the CDSCs and higher
12b-1 fees charged on Class B shares can cost you more
than the Class A front-end sales charges, especially on
purchases that are eligible for breakpoint discounts.
This can make Class B shares more expensive to you
and economically inferior to Class A shares depending
upon the fund, the amount invested in the fund, and
the holding period. If you are considering investing in
Class B shares, you should discuss with your Financial
Advisor whether an investment in Class A shares might
be preferable for you, considering the availability of
breakpoint discounts on the front-end sales charge
and the generally lower 12b-1 fees of Class A shares.
Some fund companies and brokerage firms (including
Morgan Stanley Smith Barney) limit the amount of
Class B shares you can purchase in a fund.
Class C Shares
Investments in Class C shares usually are not subject
to front-end sales charges. However, purchasers of
Class C shares are typically required to pay a CDSC if
the shares are sold within a short time of purchase,
usually one year. The 12b-1 fees associated with Class C
shares are typically higher than those of Class A shares.
Similar to Class B shares, the portion of the 12b-1 fee
that is used for distribution expenses, typically 0.75%
per year of the fund’s assets, is effectively an assetbased
sales charge paid over time rather than a frontend
sales charge applicable to Class A share purchases.
These charges allow the fund’s distributor to recover its
costs of distributing the fund (including compensation
payable to Morgan Stanley Smith Barney Financial
Advisors). However, unlike Class B shares these fees
continue indefinitely, because in most cases the Class
C shares do not convert into Class A shares as Class B
shares typically do. It’s important to refer to the Fund’s
prospectus for complete information.
In most cases, owning Class C shares over longer
holding periods will be more expensive than owning
Class A shares or Class B shares. Remember that higher
expenses will mean reduced investment performance.
Class C shares are often purchased by investors who
have a shorter-term investment horizon, because during
those first years they will generally be cheaper to buy
and sell than Class A or Class B shares.
Single Share Class Funds
Certain fund families may offer only one share class for
investors who purchase the funds through commissionbased
brokerage accounts. These single share class
funds are generally similar to the Class C shares offered
by other fund families. Typically, the 12b-1 fees associated
with these shares are higher than those of Class A
shares and they continue indefinitely. In addition, these
single share class funds do not typically offer salescharge
discounts (“breakpoints”) on large individual or
cumulative purchases. Because these discounts can be
significant, especially at investment levels of $500,000
or more, investors should consider all factors when
making such an investment, including the impact that
the share class fees can have on performance and the
fact that other fund families offer breakpoints. Speak
with your Financial Advisor for more information.
Retirement Shares
Many mutual fund families offer one or more share
classes specifically for use by employer-sponsored
retirement plans as investment options for plan
participants (“Retirement Shares”). Some fund
companies offer Class A shares with the front-end
sales load waived, while others offer a share class that
is dedicated solely to employer-sponsored retirement
plans and does not charge a front-end or back-end sales load (e.g., “R shares”). In either case, the mutual fund
families generally have specific eligibility criteria and/or
plan asset size or participant number requirements for
purchasing the shares.
Advisory Account (No-Load) Shares
No-load shares do not have front-end or back-end sales
charges, and their expenses are typically the lowest of
any share class. Morgan Stanley Smith Barney may offer
these shares in many of its fee-based advisory programs.
These accounts charge fees for the advice and services
provided to clients based upon a percentage of billable
assets held in the account. Please refer to the advisory
program documents for more information on the fees
and expenses for these accounts.
Exchanges Between Funds Within
the Same Fund Family
Fund families typically offer options to reduce or
eliminate sales charges in certain instances. The most
common options available to investors are within
fund family exchange privileges and fund transfer and
repurchase fee waiver programs.
Reducing or Eliminating Sales Charges
Exchanges between the same share classes of funds
within the same fund family typically may be made
without sales charges. Funds often limit the number and
frequency of transfers that can be made during a certain
period of time. Certain funds may impose short-term
exchange or redemption fees based on your holding
period. Because these time parameters and the amount
of any fees vary among mutual fund companies, please
check the mutual fund prospectus for more information.
Waivers on Fund Transfers and Repurchases
Many funds allow investors who have redeemed shares
from a fund within the same family to either purchase
Class A shares without a sales load, or purchase Class
B shares and recoup any CDSC paid on the redeemed
shares, while resetting the redemption fee clock (or
CDSC period) to the period applicable to the original
Class B share purchase. For example, if an investor
redeemed Class B shares after their CDSC period had
expired, then that investor could, within a specified
time period (ranging from 60 days to up to one year),
purchase shares in the same fund family in an amount
up to the dollar value of the redeemed shares without
the new shares being subject to a new CDSC. The new
shares would also convert to Class A shares according
to the original schedule applicable to the redeemed shares (less any time lapse between redemption
and repurchase).
Since each fund or fund family sets its own conditions
for these load-waiver programs, you should refer to the
fund prospectus and also consult your Financial Advisor
for specific program conditions.
Understand the Facts About Your Fee Structure
When it comes to front-end sales charges, breakpoint
discounts, CDSCs (including whether, and over what
time period, they decline), 12b-1 fees and other shareclass
and pricing terms, each mutual fund follows its own
policies, which are described in the fund’s prospectus or
SAI. Here are some things to keep in mind when making
a mutual fund investment.
Understand how breakpoints work. Read the mutual
fund prospectus. Consult the fund’s SAI, check the fund’s
Web site or ask your Financial Advisor for additional
information about the sales charges and other costs of
owning the fund’s different share classes.
Review your mutual fund holdings. Before making a
mutual fund purchase, review your account statements
and those of your family to identify opportunities to
achieve a breakpoint discount. Don’t limit your review to
accounts at a single brokerage firm. You may have related
mutual fund holdings in multiple accounts at different
brokerage firms, or with the mutual fund company itself,
that can be aggregated for the purpose of achieving a
breakpoint discount.
Keep Your Financial Advisor Informed
Be sure to tell your Financial Advisor about your mutual
fund holdings and those of your family, including
holdings at other brokerage firms or with the mutual
fund company itself. Also, discuss any plans you may
have for making any additional purchases in the future.
Discuss your expected investment horizons with your
Financial Advisor. With this information, your Financial
Advisor can help you select a share class that may help
minimize the fees that you will pay over the life of your
investment.
Our Relationship with Mutual Fund Families
Morgan Stanley Smith Barney offers clients a large
selection of mutual funds. We review and evaluate each
fund family whose mutual funds we offer based upon
various factors, including but not limited to:
-
number and variety of funds offered;
-
length of track record and historical appeal to our
clients and Financial Advisors;
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short-and long-term performance of
the funds offered;
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size of assets under management;
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ability to support our Financial Advisors and clients
through training, education and sales literature; and
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level of interest and demand among our clients and
Financial Advisors.
Evaluating the fund families in this manner allows us
to focus our marketing and sales support resources on
the fund families of greatest interest to our clients and
their Financial Advisors. Our Financial Advisors are not
permitted to execute investments in funds that we have
not reviewed and evaluated.
Fund families have access to our branch offices and
Financial Advisors for educational, marketing and
other promotional efforts. Although all fund families are
provided with such access, some fund families devote
more staff and resources to these activities and therefore
may have enhanced opportunities to promote their
funds to our Financial Advisors. This fact could, in turn,
lead our Financial Advisors to focus on those funds when
recommending mutual fund investments to our clients
instead of on funds from those fund families that do not
commit similar resources to educational, marketing and
other promotional efforts.
How We Are Compensated for Mutual Fund Sales
Brokerage Accounts - Sales Charges
Each time you purchase a mutual fund in a commissionbased
brokerage account, the fund family pays an
amount to us as compensation based upon the amount
of your investment and the share class you have
selected. A portion of these payments is allocated to
your Financial Advisor.
A fund’s dealer-compensation practices are described
in its prospectus and SAI. Typically, for front-end
sales charge share classes, the fund families pay
Morgan Stanley Smith Barney most of the initial salescharge
you pay. For back-end sales-charge share classes
(and for very large Class A share purchases that qualify
for a complete waiver of their front-end sales-charge),
the fund distribution company pays Morgan Stanley
Smith Barney a selling fee at a rate set by the fund family.
Morgan Stanley Smith Barney also receives shareholderservicing
payments (sometimes called trails) as long as
you continue to hold the shares in your Morgan Stanley
Smith Barney account or directly at the fund if we act
as your “broker of record.” These payments are generally
made by the fund’s principal distributor from 12b-1 fee revenues charged against fund assets. Your Financial
Advisor receives a portion of each of these payments.
The portion of these payments that we pay to your
Financial Advisor is based upon Morgan Stanley
Smith Barney’s standard compensation formulas.
Morgan Stanley Smith Barney’s Financial Advisor
compensation formulas are the same regardless of
which fund you purchase. However, some funds may
impose higher sales charges than others, which can
affect the amount paid to your Financial Advisor. In
addition, because funds’ sales charges are different for
their different share classes, the choice of share class
can significantly affect the compensation your Financial
Advisor receives.
Feel free to ask your Financial Advisor how he or she will
be compensated for any mutual fund transaction.
Brokerage Accounts - Revenue Sharing
From each fund family offered, Morgan Stanley
Smith Barney seeks to collect a mutual fund support fee,
or what has come to be called a revenue-sharing payment.
These revenue-sharing payments are in addition to
the sales charges, 12b-1 fees, applicable redemption
fees and deferred sales charges and other fees and
expenses disclosed in the fund’s prospectus fee table.
Revenue sharing payments are generally paid out of the
investment advisor’s or other fund affiliate’s revenues
or profits and not from the fund’s assets. However, fund
affiliate revenues or profits may in part be derived from
fees earned for services provided to and paid for by
the fund.
In 2010, Morgan Stanley Smith Barney is charging fund
families revenue-sharing fees up to a maximum per fund
family of: (a) 0.10% per year ($10 per $10,000) on fixed
income fund assets held by our clients, and (b) 0.13% per
year ($13 per $10,000) on equity, balanced and offshore
fund assets held by clients, subject to a minimum charge
of $125,000 per year per fund family. In addition, the
mutual fund support fee is subject to volume discounting
(that is, as assets increase, the percentage rate charged
for those assets will decrease). Fund families that do
not remit revenue-sharing payments typically will not
be provided access to our branch offices and will not
participate in or receive other promotional support.
It is important to note that Financial Advisors receive
absolutely no additional compensation as a result of any
revenue-sharing payments received by Morgan Stanley
Smith Barney. A list of revenue sharing fund families
organized by size of payment is available on our Web
site at the address noted in the For More Information
section below.
Advisory Accounts - Program Fees
Mutual funds offered in our advisory account programs
are not subject to front-end or ongoing transactional
sales charges. Rather, these accounts charge fees for
the advice and services provided to clients based upon a
percentage of billable assets held in the account. Please
refer to the advisory program disclosure documents for
more information on the fees and expenses for these
accounts.
Expense Reimbursements and
Administrative Service Fees
Morgan Stanley Smith Barney receives expense
reimbursements and fees for record-keeping and
related services, which are more fully described below.
These reimbursements and record-keeping fees may be
viewed as a form of revenue sharing and are in addition
to the revenue sharing payments described above.
Morgan Stanley Smith Barney and its Financial Advisors
may be reimbursed by funds or their affiliates or other
service providers for the expenses incurred for various
sales meetings, seminars and conferences held in
the normal course of business. Funds or their service
providers may also pay vendors directly for these services
on our behalf. Although fund companies independently
decide what they will spend on these activities, some
fund companies allocate their promotional budgets
based upon prior sales and asset levels. They may also
work with our branch offices or Financial Advisors to
plan promotional and educational activities on the basis
of such budgets. Morgan Stanley Smith Barney does
not control fund companies’ determinations of how to
allocate their promotional budgets or their spending
decisions in this regard.
Morgan Stanley Smith Barney and/or its affiliates
receive compensation from funds or their affiliated
service providers for providing certain recordkeeping
and related services to the funds. These charges typically
are based upon the number or aggregate value of client
positions and the levels of service provided. We process
transactions with certain fund families on an omnibus
basis, which means Morgan Stanley Smith Barney
consolidates its clients’ trades into one daily trade in our
name with the fund, and therefore maintains all pertinent
individual shareholder information for the fund. Trading
in this manner requires that we maintain the transaction
history necessary to track and process front-end sales
charges, annual service fees and applicable redemption
fees and deferred sales charges for each position, as
well as other transaction details required for ongoing
position maintenance purposes. We charge those
funds administrative service fees of up to $21 per year per position held by our clients in commission-based
brokerage accounts. The annual fees for positions held
by clients in our fee-based advisory account programs
are generally 0.12% ($12 per $10,000) of fund assets
per year for non-retirement accounts but range up to
0.35% ($35 per $10,000) of fund assets per year for
both non-retirement accounts in our TRAK NAV program
and retirement accounts in our Fund Solution Program.
Please refer to the applicable advisory account program
disclosure documents for more information.
Because omnibus trading offers economies for us and
the funds that are greatest when daily trade volumes
are high, we have sought to establish omnibus trading
arrangements with the fund families that our clients
trade the most. You can obtain a listing of these fund
families at:
http://www.morganstanleyindividual.com/
investmentproducts/funds/.
All other fund families are traded on a networked basis,
which means Morgan Stanley Smith Barney submits
a separate trade for each individual client trade to the
fund, and therefore we maintain only certain elements
of the fund’s shareholder information. We charge these
remaining funds a networking fee of up to $11 per year
per position held by our clients in commission-based
brokerage accounts.
Other Compensation Received from Funds
Morgan Stanley Smith Barney or its affiliates receive from
certain funds compensation in the form of commissions
and other fees for providing traditional brokerage
services, including related research and advisory
support, and for purchases and sales of securities for
fund portfolios. We also receive other compensation
from certain funds for financial services performed for
the benefit of such funds. Morgan Stanley Smith Barney
prohibits linking the determination of the amount of
brokerage commissions and service fees charged to a
fund to the aggregate values of our overall fund-share
sales, client holdings of the fund or to offset the revenue
sharing or expense-reimbursement and administrative
fees described above.
For More Information
For additional information on a particular fund’s
payment and compensation practices, please refer
to the fund’s Prospectus and Statement of Additional
Information. Further information regarding revenue
sharing, the fund fees and expenses borne by you and
how Morgan Stanley Smith Barney and your Financial
Advisor are compensated when you purchase and
hold mutual fund shares is available at:
http://www.morganstanleyindividual.com/investmentproducts/funds/. or by calling your Financial Advisor.
Important Note:
Some of the information in this disclosure has been
adapted in part from information available on FINRA’s
Web site. We invite you to examine the wealth of
information provided on FINRA’s Web site (
www.FINRA.org)
and the SEC’s Web site (
www.SEC.gov). In particular,
you can find calculators on both Web sites to assist in
determining which share class in a fund family offers the
least expensive fee structure. FINRA’s Fund Analyzer”
is located at:
http://apps.finra.org/fundanalyzer/1/
fa.aspx and the SEC’s
"Mutual Fund Cost Calculator" is
located at
http://www.sec.gov/investor/tools/mfcc/mfcc-intsec.htm
Mutual funds are sold by prospectus only. You should
consider the investment objectives, risks, charges
and expenses of the fund carefully before investing.
The prospectus contains this and other information
about the fund. You can obtain a prospectus from
your Financial Advisor or the fund company’s
website. Please read the prospectus carefully before
investing.
Equity funds are subject generally to market, market
sector, market liquidity, issuer and investment style
risks, among other factors, to varying degrees. Bond
mutual funds are subject generally to interest rate, credit
liquidity and market risks to varying degrees. These risks
are more fully described in the fund’s prospectus.
Morgan Stanley Smith Barney LLC, its affiliates, and its employees are not in the business of providing tax or legal advice. These materials and any tax-related
statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related
statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the
extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
The information contained herein has been obtained from sources that we believe are reliable, but we do not guarantee its accuracy or completeness. Neither the
information nor any opinion expressed herein constitutes a solicitation by us for the purchase or sale of any security. This material, or any portion thereof, may not
be reproduced without prior written permission from Morgan Stanley Smith Barney.