Business Continuity & Other Disclosures

Important Legal Information
Alternative Investment Network Fees
Annuity Fees and Revenue Disclosure
Auction Rate Securities Payments Disclosure
Business Continuity Disclosure
Business Continuity Planning—Pandemic Statement of Preparation
Confirmation of Executions and/or Cancellations
Disclosure Regarding Securities Lending in Margin Accounts
Disclosure Statement
Estimated Annual Income and Estimated Yield
Estimated Annual Income and Estimated Yield (Spanish)
Extended-Hours Trading Risk Disclosure
Float Disclosure
Mutual Fund, Money Fund and FDIC-Insured Bank Program Disclosures
 > Mutual Fund Sales Charges
 > Mutual Fund Breakpoint Disclosures
 > Mutual Fund Fees and Revenue Sharing
 > Money Fund and FDIC-Insured Bank Program Fees and Revenue Sharing
National Instrument 24-101 Trading Matching and Settlement
Nonbank Custodian Statement Message
Order Routing SEC Rule 606
Pershing's Impartial Lottery Process: Partial Calls
Prohibition Against Internet Gambling
Sponsorship Fees Disclosure
Trailing Stop Orders
Unit Investment Trust (UIT) Payments Disclosure

Important Legal Information - Please read the disclaimer before proceeding

  • PLEASE READ THESE TERMS AND CONDITIONS CAREFULLY. BY ACCESSING THIS SITE AND ANY PAGES THEREOF, YOU AGREE TO BE BOUND BY THE TERMS AND CONDITIONS BELOW. IF YOU DO NOT AGREE TO THE TERMS AND CONDITIONS BELOW, DO NOT ACCESS, VIEW OR USE THIS SITE, OR ANY PAGES THEREOF.
  • This site has been designed for informational purposes only and does not constitute an offer to sell nor a solicitation of an offer to buy any security that may be referenced on the site. Such offers can only be made where lawful under applicable law. The services and information provided through this site are for advisor use only and not intended for personal individual use. Pershing LLC and its affiliates do not intend to provide investment advice through this site and do not represent that the securities or services discussed are suitable for any investor. Pershing and its affiliates do not, and this site does not intend to, render tax or legal advice.
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    ‘Hypertext Links’ and/or ‘hyperlinks’ to or from other Internet sites, may be included at times as a convenience to the user. Such sites are outside the control of Pershing. Pershing and its affiliates assume no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval, adoption, or endorsement of any material contained on any linked site, any services on such site, or the sponsoring organization of such site. PERSHING AND ITS AFFILIATES ARE NOT LIABLE FOR ANY HARM, DAMAGES OR LOSSES CAUSED BY ANY MATERIAL, INFORMATION, SERVICES OR A SPONSORING ORGANIZATION OF SUCH SITE, WHETHER ACTUAL, ALLEGED, CONSEQUENTIAL OR PUNITIVE.
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    This site permits you to communicate electronically by sending an e-mail message to Pershing. By use of this site, you agree not to use e-mail to give Pershing or its affiliates any instruction affecting your account(s) or any linked accounts, including, but not limited to, placing orders to purchase or sell a security or to transfer funds. You also agree not to use e-mail for the transmission of any personal credit information (including account numbers or credit card numbers), to give notice of a change of address, or to give Pershing or its affiliates any time-sensitive instructions. Pershing and its affiliates shall not be liable for any actions taken or any omissions to act as a result of any e-mail message you send via this site.
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    Users of this website shall be bound by all applicable laws of the United States of America and the laws of the State of New York. The appropriate federal or county court located in the city and county of New York shall have exclusive jurisdiction for any action or dispute arising out of this website or these terms and conditions.

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Alternative Investment Network Fees
Pershing may receive servicing fees from managed futures funds, hedge funds and fund-of-funds (collectively "alternative investments") that participate in Pershing's Alternative Investment Network no-fee program in lieu of transaction fees and special product fee charges to your firm. These fees are calculated in accordance with an asset-based formula. Pershing also receives set-up fees from alternative investment providers or broker-dealers in the form of a one-time fee to add an alternative investment to the platform. The fee is a flat fee per CUSIP® and is remitted to Pershing for its work to set up the alternative investment. For additional details regarding Pershing's Alternative Investment Network no-fee program or a listing of entities that pay fees to Pershing, please refer to www.pershing.com/alternative_investment_network_fees.html.

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Annuity Fees and Revenue Sharing Disclosure
Pershing may receive servicing fees from certain insurance companies that participate in Pershing's annuity program. Participation by your financial organization in this program is optional. These fees may be considered revenue sharing and are a source of revenue for Pershing.

Pershing also receives operational reimbursement fees from certain insurance companies. A flat fee per holding is paid to Pershing for the services it provides, which may include, but is not limited to, posting, accounting reconciliation, and client statement preparation and mailing. These fees are a source of revenue for Pershing. For additional details regarding processing annuities and a listing of annuities that pay Pershing revenue sharing and processing fees, please refer to www.pershing.com/annuity_fees.htm.

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Auction Rate Securities Payments Disclosure
Pershing may receive payments from the distribution agent for trades in municipal auction rate securities and closed-end fund/preferred auction rate securities executed by Pershing upon your financial organization's instruction. These payments are not charged to or paid by you. Additional information regarding such payments is available at www.pershing.com/ARS_fees.html.

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Business Continuity Disclosure
DISCLOSURE REQUIRED BY FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) 4370

To address interruptions to our normal course of business, Pershing maintains a business continuity plan, which includes geographically dispersed data centers and processing facilities. The plan is reviewed annually and updated as necessary.

The plan outlines the actions Pershing will take in the event of a building, city, or regional incident, including:

  • Continuous processing support by personnel located in unaffected facilities
  • Relocating technology or operational personnel to alternate regional facilities
  • Switching technology data processing to an alternate regional data center
All Pershing operational facilities are equipped for resumption of business and are tested. Regarding all circumstances within our control, Pershing's recovery time objective (RTO) for business resumption, including those involving a relocation of personnel or technology, is four (4) hours or less, depending upon the availability of external resources.

In the event that your financial organization experiences a significant business interruption, you may contact Pershing directly to process limited trade-related transactions, cash disbursements, and security transfers. Instructions to Pershing must be in writing and transmitted via facsimile at (201) 413-5368 or by postal service as follows:

Pershing LLC
P.O. Box 2065
Jersey City, NJ 07303-2065

For additional information about how to request funds and securities when your financial organization cannot be contacted due to a significant business interruption, please visit the Client Support section or call (201) 413-3635 for recorded instructions.

If you cannot access the instructions from the website or the previously noted telephone number, you may call (213) 624-6100, extension 500, an alternate Pershing number for recorded instructions.

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Business Continuity Planning—Pandemic Statement of Preparation
Pershing has developed a Statement of Preparation to address the possibility of a pandemic outbreak and provide you with an overview of our plans for mitigating the potential impact.

If such a situation occurs, we are confident that we are well positioned to maintain critical functions in support of your business.

Please visit the Pandemic Statement of Preparation section of this website for complete information regarding our pandemic business continuity plans.

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Confirmation of Executions and/or Cancellations
Confirmations of executions or cancellations may be delayed, erroneous (e.g., due to computer system issues) or cancelled/adjusted by an exchange or market center. Any reporting or posting errors, including errors in execution prices or cancellations, will be corrected to reflect what actually occurred in the marketplace; you will be bound by such terms. The cancellation of an order is not guaranteed and will only be cancelled if the request is received by the market center to which the order was routed and matched with the order to be cancelled before it is executed. During market hours, it is rarely possible to cancel a market order or a marketable limit order, as such orders are subject to immediate execution. You should not assume that any order has been executed or canceled until you have received a transaction or cancellation confirmation from your financial organization or Pershing.

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Disclosure Regarding Securities Lending in Margin Accounts
Before trading securities in a margin account, you should carefully review the margin agreement and consult with your financial organization regarding any questions or concerns. You should be aware that, pursuant to the margin agreement with Pershing LLC, and as permitted by law, margin securities in your account may be used for, among other things, settling short sales and lending the securities for short sales. As a result, Pershing and your financial organization may receive compensation in connection therewith. Further, buying securities on margin might result in dividends being paid as substitute payments or cash-in-lieu, which could lead to a different tax treatment for the investor. In addition, investors who buy securities on margin might not be allowed to vote those securities in the event of a proxy. Pershing does not lend fully-paid-for securities without your written permission under a separate Fully Paid Lending Agreement.

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Estimated Annual Income and Estimated Yield
The following disclosure pertains to estimated annual income (EAI) and estimated current yield (ECY) figures displayed on Pershing LLC's brokerage account statements.
The EAI and ECY figures are estimates and for informational purposes only. These figures are not considered to be a forecast or guarantee of future results. These figures are computed using information from providers believed to be reliable; however, no assurance can be made as to the accuracy. Since interest and dividend rates are subject to change at any time, and may be affected by current and future economic, political and business conditions, they should not be relied on for making investment, trading or tax decisions. These figures assume that the position quantities, interest and dividend rates, and prices remain constant. A capital gain or return of principal may be included in the figures for certain securities, thereby overstating them.

The EAI figure for U.S. government, corporate and municipal securities is computed by multiplying the coupon rate by the quantity of the security and then dividing that figure by 100. The resulting figure is reflected on the brokerage account statement in the EAI field.

The EAI for equity, mutual fund, unit investment trust and exchange-traded fund securities is computed using either a historical methodology (HM) or projected methodology (PM), depending on the information from the issuer. The PM annualizes the latest regular cash dividend. The HM accumulates the regular cash dividends over the past twelve months. If there is less than one year of dividend history, the accumulated dividends are annualized. The EAI for preferred securities is computed using the PM. The HM or PM figure, whichever is calculated, is then multiplied by the quantity of the security and the resulting figure is reflected on the brokerage account statement in the EAI field.

The following are important caveats to the HM figure and PM figure.

  • The figure is denominated in the same currency as the dividend announcement.
  • The figure does not contemplate special or extra dividends.
  • When a security pays its first dividend with no specificity as to dividend frequency, the initial dividend will be the reported figure.
  • If a security announces a stock split and does not announce a new dividend rate, the figure will be adjusted on the ex-distribution/dividend date.
  • For a called security, the figure will remain unchanged until the payment date, at which point it will revert to zero.
  • The figure for Canadian securities is calculated the same way as for U.S. securities.
  • The figure for mutual funds only includes dividends treated as income.
  • The figure will be zero under the following scenarios: a security that has only paid capital gains during the preceding year; a security that has only had stock splits, stock (not cash) dividends or reverse stock splits during the preceding year; a security other than an open-end mutual fund (excluding a money market fund), American Depository Receipt (ADR) preferred, or exchange-traded fund which rescinds or omits a dividend payment; and a security from an issuer which is in arrears and uncertain about its ability to make a dividend payment.
The ECY figure is computed by dividing the EAI figure by the current market price of the security, which may be higher or lower than the purchase price, and then the figure is multiplied by 100. The resulting figure is reflected on the brokerage account statement in the ECY field. With specific regard to a fixed income security, the initial purchase confirmation oftentimes reflects yield to maturity, yield to call and/or yield to worst figures, which are more relevant figures from the point of purchase.

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Ingresos Anuales y Réditos Estimados
La siguiente declaración está relacionada con las cifras correspondientes a los ingresos anuales estimados (EAI, por sus siglas en inglés) y al rédito actual estimado (ECY) presentadas en los estados de cuenta de la cuenta de corretaje de Pershing LLC.

Las cifras correspondientes a los ingresos anuales estimados (EAI) y al rédito actual estimado (ECY) son estimativas y se proporcionan únicamente con fines informativos. No se considera que estas cifras constituyan una previsión o garantía de resultados futuros. Estas cifras se calculan utilizando información proveniente de proveedores que se consideran confiables; no obstante, no puede brindarse seguridad con respecto a su exactitud. Dado que las tasas de interés y de dividendos están sujetas a cambio en cualquier momento, y pueden verse afectadas por las condiciones económicas, políticas y empresariales, tanto actuales como futuras, no se debería confiar en dichas tasas para tomar decisiones en materia de inversiones, compraventa o de carácter tributario. Estas cifras suponen que las cantidades de la posición, las tasas de interés y de dividendos, y los precios permanecen constantes. En el caso de ciertos títulos, en las cifras se puede incluir una ganancia de capital o rendimiento del capital, con lo cual dichas cifras estarían sobreestimadas.

La cifra de ingresos anuales estimados (EAI) correspondiente a títulos del gobierno de EE. UU., títulos corporativos y títulos municipales se calcula multiplicando la tase de cupón por la cantidad de títulos y luego dividiendo esa cifra por 100. La cifra que se obtiene como resultado se refleja en el estado de cuenta de la cuenta de corretaje en el campo correspondiente a los ingresos anuales estimados (EAI).

Los ingresos anuales estimados (EAI) correspondientes a títulos accionarios, títulos de fondos mutuos, títulos de fondos mutuos de inversiones (unit investment trust) y títulos de fondos comercializados en bolsa se calculan utilizando ya sea una metodología histórica (HM, por sus siglas en inglés) o una metodología proyectada (PM, por sus siglas en inglés), dependiendo de la información proveniente del emisor. La metodología proyectada (PM) anualiza el último dividendo en efectivo regular. La metodología histórica (HM) acumula los dividendos en efectivo regulares de los últimos 12 meses. Si el historial de dividendos es menor a un año, los dividendos acumulados se anualizan. Los ingresos anuales estimados (EAI) correspondientes a los títulos preferentes se calculan utilizando la metodología proyectada (PM). La cifra correspondiente a la metodología histórica (HM) o a la metodología proyectada (PM), cualquiera que sea calculada, luego se multiplica por la cantidad del título, y la cifra que se obtiene como resultado se refleja en el estado de cuenta de la cuenta de corretaje en el campo correspondiente a los ingresos anuales estimados (EAI).

Las siguientes son advertencias importantes para calcular la cifra mediante la metodología histórica (HM) y la metodología proyectada (PM).

  • La cifra está denominada en la misma moneda que el anuncio de dividendo.
  • La cifra no contempla dividendos especiales o extras.
  • Cuando un título paga su primer dividendo sin especificar la frecuencia del dividendo, el dividendo inicial será la cifra informada.
  • Si un título anuncia una división de acciones y no anuncia una nueva tasa de dividendo, la cifra se ajustará en la fecha sin distribución (ex-distribution) o sin dividendo (ex-dividend).
  • En el caso de un título rescatado, la cifra permanecerá sin cambio  hasta la fecha de pago, momento en el cual se revertirá a cero.
  • La cifra para los títulos canadienses se calcula de la misma forma que para los títulos estadounidenses.
  • La cifra para los fondos mutuos solamente incluye dividendos tratados como ingresos.
  • La cifra será cero en las siguientes situaciones hipotéticas: un título que solamente ha pagado ganancias de capital durante el año anterior; un título que solamente ha tenido división de acciones, dividendos de acciones (no dividendos en efectivo) o divisiones inversas de acciones, durante el año anterior; un título que no sea de un fondo mutuo abierto (sin incluir un fondo de mercado monetario), un fondo de recibos de depósito americanos (ADR, por sus siglas en inglés) preferentes o un fondo comercializado en bolsa, que rescinda u omita un pago de dividendo; y un título proveniente de un emisor que esté en mora y no tenga certeza acerca de su capacidad de efectuar un pago de dividendo.
La cifra correspondiente al rédito actual estimado (ECY) se calcula dividiendo la cifra de los ingresos anuales estimados (EAI) por el precio actual de mercado del título, el cual puede ser mayor o menor que el precio de compra, y luego la cifra se multiplica por 100. La cifra que se obtiene como resultado se refleja en el estado de cuenta de la cuenta de corretaje en el campo correspondiente al rédito actual estimado (ECY). Específicamente con respecto a un título de ingresos fijos, la confirmación de compra inicial a menudo refleja el rédito hasta el vencimiento, el rédito hasta el rescate y/o el rédito con relación a las peores cifras, que constituyen las cifras más importantes desde el punto de vista de la compra.

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Extended-Hours Trading Risk Disclosure
You should consider the following points before engaging in extended-hours trading. "Extended-hours trading" means trading outside of "regular trading hours." "Regular trading hours" generally means the time between 9:30 a.m. (ET) and 4 p.m. (ET).

Risk of Timing of Order Entry—All orders entered and posted during extended-hours trading sessions must be limit orders. You must indicate the price at which you would like your order to be executed. By entering the price, you agree not to buy for more or sell for less than the price you entered, although your order may be executed at a better price. Your order will be executed if it matches an order from another investor or market professional to sell or purchase on the other side of the transaction. In addition, there may be orders entered ahead of your order by investors willing to buy or sell at the same price. Orders entered earlier at the same price level will have a higher priority. This means that if the market is at your requested price level, an order entered prior to your order will be executed first. This may prevent your order from being executed in whole or in part.

Risk of Execution Pricing—For extended-hours trading sessions, quotations will reflect the bid and ask currently available through the utilized quotation service. The quotation service may not reflect all available bids and offers posted by other participating electronic communications networks (ECNs) or exchanges, and may reflect bids and offers that may not be accessible through Pershing or respective trading partners. This quotation montage applies for both pre- and post-market sessions.

Not all systems are linked; therefore, you may pay more or less for your security purchases or receive more or less for your security sales through a participating ECN or exchange than you would for a similar transaction on a different ECN or exchange.

Risk of Communications Delays or Failures—Delays or failures in communications due to a high volume of orders or to other computer or system problems, including Internet disruptions, may cause delays in or prevent the execution of your order. Any communication or computer problems experienced by Pershing, its designated order manager, or participating ECN or exchange, may prevent or delay the order from being executed. Pershing reserves the right to temporarily or permanently close an extended-hours trading session without prior notification in the event of system failures or unforeseen emergencies. Pershing will not be held liable for missed executions in the case of a system failure.

Risk of Lower Liquidity—Liquidity refers to the ability to buy and sell securities. Generally, if there are more orders available in the market, then the security is more liquid. Due to limited trading activity in the extended-hours trading sessions, the liquidity in these sessions may be significantly less than during regular market hours. Lower liquidity may prevent your order from being executed in whole or in part, or from receiving as favorable a price as you might receive during regular trading hours. In addition, lower liquidity means fewer shares of a given security are being traded, which may result in larger spreads between bid and ask prices and volatile swings in stock prices.

Risk of Trading Halts—News stories may have a significant impact on stock prices during extended-hours trading sessions. The Securities and Exchange Commission (SEC), Financial Regulatory Authority (FINRA), or a stock exchange may impose a trading halt when significant news has affected a company's stock price. Any SEC-, FINRA-, or exchange-imposed trading halt will be enforced. Pending orders for a security will be held upon imposition of a trading halt for that security and reinitiated upon resumption of trading during that session.

Risk of Duplicate Orders—There is a risk of duplicate orders if you place an order for the same security in both an extended-hours session and the regular trading session, even if that order is a day order. Orders executed during regular trading hours may not be confirmed until after the post-market extended trading session has already begun. Similarly, orders executed in the pre-market session may not be confirmed until after regular trading has begun.

Risk of Partial Executions—Orders placed during extended trading hours are entered through a participating ECN or exchange, which may be linked to other ECNs or exchanges. Because you cannot add qualifiers to an order, such as all or none (AON) or fill or kill (FOK), a round lot order may be filled in part by an odd lot or mixed lot order, leaving stock left over to buy or to sell. There is a risk that the remaining order may not be filled during the extended-hours session. An odd lot may not be represented in the displayed quote. This would occur in instances in which an order has an execution leaving an odd lot. There are no execution guarantees for an odd lot or the odd lot portion of a mixed lot portion of an order.

Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value—For certain derivative securities products, an updated underlying index value or intraday indicative value may not be calculated or publicly disseminated in extended trading hours. Since the underlying index value and intraday indicative value are not calculated or widely disseminated during the opening and late trading sessions, an investor who is unable to calculate implied values for certain derivative securities products in those sessions may be at a disadvantage to market professionals.

Risk of Higher Volatility—Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended-hours trading than in regular market hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price in extended-hours trading than you would during regular market hours.

Risk of News Announcements—Normally, issuers make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In extended-hours trading, these announcements may occur during trading and, if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.

Risk of Wider Spreads—The spread refers to the difference in price for which you can buy and sell a security. Lower liquidity and higher volatility in extended-hours trading may result in wider than normal spreads for a particular security.

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Float Disclosure
Pershing may obtain a financial benefit attributable to the cash balances in any account (including Employee Retirement Income Security Act accounts) that are held by Pershing in accounts that it has with major money center banks (the names of which will be provided upon request). These cash balances result from (1) cash awaiting investment or (2) cash pending distribution. Pershing's financial benefit may be in the form of interest earned on such balances and/or reductions in interest expenses that Pershing would otherwise pay to such money center banks. To the extent that the financial benefit is in the form of interest paid to Pershing, it is often paid at the federal funds rate.

With respect to cash awaiting investment (e.g., new contributions), Pershing obtains such financial benefit until the funds are invested in a money market fund or are used to purchase securities. If an account agreement provides for the automatic investment into a money market fund, such investment will take place on the day after the receipt of cash (and the financial benefit will be one day), unless instructions are received to manually purchase money fund shares on the same day that cash is received. Such instructions must be received before the cutoff time established by each money market fund available to the account. If the account agreement does not provide for automatic investment into a money market fund, such investment will take place on the day after the receipt of appropriate instructions.

When Pershing receives a request for a distribution by check, the account is charged (debited) on the date the check is written. Cash is transferred to a Pershing disbursement account maintained with a major money center bank on the day the check is presented for payment. Pershing mails disbursement checks on the same day that they are written. Pershing may obtain the financial benefit described above from the date the check is written until the date the check is presented for payment, the timing of which is beyond the control of Pershing. When a distribution is requested using a Automated Clearing House instruction, Pershing receives a one-day financial benefit in connection with the distribution. If the distribution is made using the Federal Reserve wire system, Pershing receives no financial benefit in connection with the distribution.

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Mutual Fund, Money Fund and FDIC-Insured Bank Program Disclosures
CHARGES, BREAKPOINT DISCOUNTS, FEES, AND REVENUE SHARING
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 to reduce the cost of your investment.

This section 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 matters with your advisor and review each mutual fund's prospectus and statement of additional information (which are available from your advisor) to obtain the specific information regarding the charges and breakpoint discounts associated with a particular mutual fund.

Mutual Fund Sales Charges
Investors who purchase mutual funds must make certain choices, including which funds to purchase and which share class is most advantageous in light of their specific investing needs. Each mutual fund has a specified investment strategy. You should consider whether the mutual fund's investment strategy is compatible with your investment objectives. Additionally, many 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 the 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 predetermined 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 who purchase Class B or C shares pay asset-based sales charges, which may be higher or lower than the charges associated with Class A shares. Investors who purchase Class B or C shares may also be required to pay a sales charge known as a contingent deferred sales charge when they sell their shares, depending upon the rules of the particular mutual fund. This is known as a "back-end" sales charge or "load."

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Mutual Fund 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. The entire sales charge may be waived for investors who 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 (ROA) and from future purchases based upon Letters of Intent (LOI). Mutual funds have different rules regarding the availability of ROAs and LOIs. Therefore, you should discuss these matters with your advisor and review the mutual fund's prospectus and statement of additional information to determine the specific terms upon which a mutual fund offers ROAs or LOIs.

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 may allow investors to count existing holdings in multiple accounts, such as individual retirement accounts (IRAs) or accounts at other financial organizations to qualify for breakpoint discounts. Therefore, if you have accounts at other financial organizations and wish to take advantage of the balances in these accounts to qualify for a breakpoint discount, you must advise your advisor about those balances. You may need to provide documentation 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 advisor and review the mutual fund's prospectus and 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 advisor about these accounts. You may need to provide documentation to your 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 costs, 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 advisor or firm, and review the mutual fund's prospectus and statement of additional information to determine whether the mutual fund uses NAV or historical costs to determine breakpoint eligibility.

Letters of Intent—Most mutual funds allow investors to qualify for breakpoint discounts by signing a LOI, which commits the investor to purchasing a specified amount of Class A shares within a defined period of time, usually 13 months. For instance, 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 an LOI 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 LOIs 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 LOI, 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 advisor and the mutual fund prospectus to determine if it would be beneficial for you to sign an LOI. 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 advisor and carefully review the mutual fund prospectus and its statement of additional information when choosing among the share classes offered by a mutual fund. If you wish to learn more about mutual fund share classes or mutual fund breakpoints, you can also review the investor alerts via the Financial Industry Regulatory Authority (FINRA) website.

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Mutual Fund Fees and Revenue Sharing
Pershing may receive servicing fees from mutual funds that participate in Pershing's mutual fund no-transaction-fee program (FundVest®) in lieu of clearance charges to your financial organization. Participation by your financial organization in this program is optional and your financial organization may share with Pershing in such fees. These fees may be considered revenue sharing and are a significant source of revenue for Pershing and may be a significant source of revenue for your financial organization. These fees are paid in accordance with an asset-based formula.

Pershing also receives operational reimbursements from mutual funds in the form of networking or omnibus processing fees. These reimbursements are based either on a flat fee per holding or a percentage of assets and are remitted to Pershing for its work on behalf of the funds. This work may include, but is not limited to, subaccounting services, dividend calculation and posting, accounting, reconciliation, client confirmation and statement preparation and mailing, and tax statement preparation and mailing. These fees are a significant source of revenue for Pershing. For additional details about Pershing's mutual fund no-transaction-fee program, or a listing of funds that pay Pershing networking or omnibus fees, please refer to www.pershing.com/mutual_fund.htm.

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Money Fund and FDIC-Insured Bank Program Fees and Revenue Sharing
Money fund processing and revenue-sharing fees are significant sources of revenue for Pershing and may be significant sources of revenue for your financial organization. Pershing receives fees from providers for making available money market funds and FDIC-insured bank deposit programs, which you may have selected through your financial organization. These fees are paid in accordance with an asset-based formula. Your financial organization may share in these fees. A portion of Pershing's fees is applied against costs associated with providing services on behalf of the providers, which may include maintaining cash sweep systems, sub-accounting services, dividend and interest calculation and posting, accounting, reconciliation, client statement preparation and mailing, tax statement preparation and mailing, marketing and distribution related support, and other services.

Pershing receives processing fees from certain providers, which may be associated with your financial organization. These fees reimburse Pershing for operational services it performs on behalf of the providers, which may include maintaining cash sweep systems, subaccounting services, dividend and interest calculation and posting, accounting, reconciliation, client statement preparation and mailing, tax statement preparation and mailing, or other services. For a listing of money funds that pay Pershing revenue sharing and processing fees, please refer to www.pershing.com/money_fund.htm.

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National Instrument 24-101 Trading Matching and Settlement
To comply with requirements of National Instrument 24-101, Pershing is required to ensure compliance with the central requirements of the instrument for all institutional trades. Click here for attestation of Pershing's National Instrument 24-101 compliance.

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Order Routing SEC Rule 606
Pershing has provided the data concerning the routing of order flow (the "Data") on the order routing disclosure website. Although Pershing has used commercially reasonable efforts to provide accurate data, the data is provided to you on an "as is" basis.

If you would like to read this information, visit the order routing disclosure site and enter Pershing LLC when prompted for the broker-dealer's full name.

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Pershing's Impartial Lottery Process: Partial Calls
When a security is subject to a partial redemption, pursuant to FINRA Rule 4340, Pershing must have procedures in place that are designed to treat clients fairly in accordance with an impartial lottery process.

When an issuer initiates a partial call of securities, the depository holding such securities (typically, the Depository Trust Corporation, or DTC) conducts an impartial, computerized lottery using an incremental random number technique to determine the allocation of called securities to participants for which it holds securities on deposit (including Pershing). Because DTC's lottery is random and impartial, participants may or may not receive an allocation of securities selected for redemption.

When Pershing is notified that it received an allocation of called securities, Pershing conducts a similar, computer-generated random lottery. The lottery determines the accounts that will be selected and the number of securities in the account that will be redeemed. Allocations are based on the number of trading units held in the account. The probability of any trading unit held by an account being selected as called in a partial call is proportional to the total number of trading units held through Pershing.

Once the lottery is complete, Pershing notifies introducing broker-dealers whose introduced accounts have received an allocation. Securities registered in the client's name, either in transit or held in custody, are excluded from the Pershing lottery process.

Pershing initiates the lottery process by identifying the accounts holding the called security, the total par value of the called securities held, and the trading unit of the security.

Example (unit of trade = $25,000):

Client Account
Par Value
Number of Trading Units
ABC-123234
$100,000
4
DEF-325465
$75,000
3
EDR-567433
$150,000
6
EGT-876574
$50,000
2
EGT-888345
$25,000
1
FRT-435234
$25,000
1
FRT-658797
$75,000
3

In brief, the allocation process involves the following steps:

  • The number of trading units held in each account is identified.
  • A sequential number is assigned to each trading unit (e.g., account EDR-567433 would be assigned six numbers).
  • A random number is generated that will result in one of these trading units being the first unit in the selection process.
  • Thereafter, the trading units participating in the allocation are based on an incremental random number technique until the number of trading units allocated to Pershing is exhausted.
Additional Information
  • The allocation of called securities is not made on a pro-rata basis. Therefore, it is possible that a client may receive a full or partial redemption of shares held. Conversely, it is also possible that a client may not have any securities selected for redemption at all.
  • When a partial call is deemed favorable to the holders of the called security, Pershing will exclude certain accounts from the lottery. Excluded accounts will include Pershing's proprietary and employee accounts, as well as proprietary and employee accounts of introducing broker-dealers (if Pershing carries and clears those accounts). No allocation will be made to these proprietary and employee accounts until all other client positions at Pershing in such securities have been called. When a partial call is deemed unfavorable to holders of the called security, Pershing will not exclude any accounts from the lottery.
  • If the partial call is made at a price above the current market price as captured in Pershing’s price reporting system, Pershing will generally categorize the partial call as one that is favorable to the holders of such security. If the partial call is made at a price that is equal to or below the current market price of the security as captured in Pershing’s price reporting system, Pershing will generally categorize that call as one that is unfavorable to holders of the security.
  • Clients have the right to withdraw uncalled, fully paid securities from Pershing at any time prior to the cutoff date and time established by the issuer, transfer agent and/or depository with respect to the partial call. Clients also have the right to withdraw excess margin securities, provided that the client account is not subject to restriction under Regulation T or that such withdrawal will not cause an under-margined condition.

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Prohibition Against Internet Gambling
In accordance with the Unlawful Internet Gambling Enforcement Act of 2006, transactions associated with unlawful internet gambling are prohibited. The Act prohibits any person engaged in the business of betting or wagering from knowingly accepting payments in connection with the participation of another person in unlawful internet gambling. Accordingly, you must not initiate or receive wire transfers, checks, drafts or other debit/credit transactions that are restricted by the Act. For more information, please refer to: www.federalreserve.gov/newsevents/press/bcreg/20081112b.htm.

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Sponsorship Fees Disclosure
Third-party product and service providers (e.g., mutual funds, annuity companies, exchange-traded funds [ETFs], money market funds, money managers, technology and business solutions) offer marketing support in the form of sponsorship fee payments to Pershing (or third parties at Pershing's direction) in connection with educational conferences, events, seminars, and workshops for broker-dealers or advisors. These payments may be for the expenses of educational materials or other conference-related expenses. For a listing of companies that pay sponsorship fees to Pershing for events, please refer to www.pershing.com/event.

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Trailing Stop Orders
Trailing stop orders can be triggered by either a transaction or by a National Best Bid/Offer (NBBO) quotation update, and can trail by dollar value or percentage, depending on which option your financial advisor chooses on an order by order basis at the time the order is placed.

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Unit Investment Trust (UIT) Payments Disclosure
When Pershing acts upon the instruction of your financial organization to execute the purchase of a UIT, Pershing may receive a payment based on the volume of sales processed by Pershing. Your financial organization may receive a concession for the sale of the UIT to you. Such payments are disclosed in the applicable trust prospectus. Additional information regarding such payment and a list of sponsors are available at www.pershing.com/UIT_fees.html.

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