Supplemental Disclosures

Mutual Funds

• Shareholder Fees - Fees charged directly to you in connection with transactions such as buying, selling, or exchanging shares, or on a periodic basis with respect to account fees.
• Sales Charge (Load) on Purchases - A fee some mutual funds charge you when you buy shares, also known as a front-end load. This fee is typically paid to the financial professional that sells the mutual fund’s shares. In this respect, a sales load is like a commission that you pay when you purchase any type of security from a financial professional. Front-end loads reduce the amount of an investment.
  
  • Example: Let’s say you have $1,000 and you want to invest it in a mutual fund with a 5%front-end load. The $50 sales load that you must pay comes off the top of the investment leaving the remaining $950 to be invested in the mutual fund.
• Purchase Fee - A fee some mutual funds charge you when you buy shares. Unlike a front-end sales load, a purchase fee is paid into fund assets (not to a financial professional) and is typically imposed to defray some of the mutual fund’s costs associated with the purchase. This fee is often imposed by a mutual fund that has high transaction costs, for example, because of its investment strategy. The fee is designed so that the other investors’ investments in the mutual fund are not diminished by the transaction costs of the purchase. Like front-end sales loads, purchase fees reduce the amount of the investment.
• Deferred Sales Charge (Load) - A fee some mutual funds charge you when they sell or redeem their shares, also known as a back-end load. This fee is typically paid to the financial professional that sells the mutual fund’s shares. The most common type of back-end sales load is the contingent deferred sales load (also known as the CDSC or CDSL). The amount of this type of sales load will depend on how long you hold your shares. It typically decreases to zero if you hold your shares for a specified time period. When you purchase shares that are subject to a back-end sales load rather than a front-end sales load, no sales load is deducted at purchase, and all of your money is immediately used to purchase fund shares (assuming that no other fees or charges apply at the time of purchase). However, a back-end sales load will reduce your return on the investment. Typically, a fund calculates the amount of a back-end sales load based on the lesser of the value of your initial investment or the value of the investment at redemption.
• Redemption Fee - A fee some mutual funds charge you when they sell or redeem your shares with in a certain time frame of purchasing the shares. Unlike a deferred sales load, a redemption fee is paid into fund assets (not to the financial professional) and is typically used to defray fund costs associated with your redemption. The SEC limits redemption fees to 2%.
• Exchange Fee - A fee some mutual funds charge you when you exchange or transfer your investment to another fund within the same fund group or family of funds.
• Account Fee - A fee some mutual funds charge you in connection with the maintenance of your account. For example, some funds impose an account maintenance fee on accounts whose value is less than a certain dollar amount.
• Annual Fund Operating Expenses - Ongoing mutual fund and ETF costs such as investment advisory fees for managing the fund’s holdings, marketing and distribution expenses, as well as custodial, transfer agency, legal, and accountant’s fees. Operating expenses are regular and recurring fund-wide expenses that are typically paid out of fund assets, which means that you indirectly pay these costs.
• Management Fees - Fees paid out of mutual fund assets to the fund’s investment adviser for investment portfolio management. They can also include other management fees payable to the fund’s investment adviser or its affiliates and administrative fees payable to the investment adviser.
• Distribution [and/or Service] (12b-1) Fees - Fees paid out of mutual fund assets to cover the costs of distribution (e.g., marketing and selling fund shares) and sometimes to cover the costs of providing shareholder services. Distribution Fees include fees to compensate financial professionals and others who sell fund shares and to pay for advertising, the printing and mailing of prospectuses, and the printing and mailing of sales literature. Shareholder Service Fees are fees paid to persons to respond to investor inquiries and provide investors with information about their investments.
• Other Expenses - Fees paid out of mutual fund assets that are not already included underManagement Fees or Distribution or Service (12b-1 Fees) (such as any shareholder service expenses that are not already included in the 12b-1 fees), custodial expenses, legal and account expenses, transfer agent expenses and other administrative expenses.

Classes of Mutual Funds

• Class A Shares - Class A shares typically charge a front-end sales load, but they tend to have a lower 12b-1 fee and lower annual expenses than other mutual fund share classes. Some mutual funds reduce the front-end load as the size of the investment increases. These discounts are called breakpoints.
• Class B Shares - Class B shares typically do not have a front-end sales load. Instead, they may charge a contingent deferred sales load and a 12b-1 fee (along with other annual expenses). Typically, the amount of the contingent deferred sales load decreases the longer you hold the shares. Class B shares also might convert automatically to a class with a lower 12b-1 fee and no contingent deferred sales load if you hold the shares long enough.
• Class C Shares - Class C shares might have a 12b-1 fee, other annual expenses, and either a front-end or back-end sales load. But the front-end or back-end load for Class C shares tends to be lower than for Class A or Class B shares, respectively. Unlike Class B shares, Class C shares generally do not convert to another class; as a result, the back-end load will not decrease overtime. Class C shares tend to have higher annual expenses than either Class A or Class B shares.
• Other Classes - Other classes may also exist for some funds.

Exchange Traded Funds ("ETFs")

• Brokerage Commissions - When investing in an ETF, you typically pay your financial professional’s sales commission with each purchase or sale of ETF shares, although some ETFs may be available commission-free. In this respect, a commission is like a sales load that you pay when purchasing or redeeming a mutual fund. Like front-end sales loads, brokerage commissions on a purchase reduce the amount of your investment. Like back-end sales loads, brokerage commissions on a sale reduce your return on the investment. A brokerage commission may be structured as a flat fee charged every time you trade. With a flat fee, the smaller the amount traded, the larger the percentage cost per trade is. You should consider the fee structure of a commission when purchasing or selling ETF shares.
• Bid-ask spread - ETFs and other securities that trade on a securities market have two market prices, the bid price and the ask price. The term bid refers to the highest price a buyer will pay to buy a specified number of ETF shares at any given time. The term ask refers to the lowest price at which a seller will sell the ETF shares. The bid price will be lower than the ask price and the difference between two prices is called the spread.
  
  Example: An ETF share is trading for $59.50/$60. The bid price is $59.50, the ask price is $60.00, and the spread is 50 cents. If you buy 200 ETF shares at the ask price of $60 and sell them immediately at the bid price of $59.50, you would incur a loss of $100. This example demonstrates the impact of the spread on an ETF investment. ETFs that are more liquid and have higher trading volume have tighter or smaller spreads. The spread can be thought of as a hidden cost to you since spreads reduce potential returns.
• Changes in discounts and premiums to NAV - For a variety of reasons, an ETF’s market price may reflect a premium or a discount to the ETF’s underlying value or NAV. This is a potential cost but also a potential gain. An ETF share is trading at a premium when its market price is higher than the NAV or the value of its underlying holdings. An ETF share is trading at a discount when its market price is lower than the NAV or value of its underlying holdings. An investor may, therefore, pay more or less than the NAV when buying shares or receive more or less than NAV when selling shares.
• Annual Fund Operating Expenses - Ongoing ETF costs such as investment advisory fees for managing the fund’s holdings, marketing and distribution expenses, as well as custodial, transfer agency, legal, and accountant’s fees. Operating expenses are regular and recurring fund-wide expenses that are typically paid out of fund assets, which means that you indirectly pay these costs.
• Management Fees - Fees paid out of ETF assets to the fund’s investment adviser for investment portfolio management. They can also include other management fees payable to the fund’s investment adviser or its affiliates and administrative fees payable to the investment adviser.
• Distribution [and/or Service] (12b-1) Fees - Fees paid out of ETF assets to cover the costs of distribution (e.g., marketing and selling fund shares) and sometimes to cover the costs of providing shareholder services. Distribution Fees include fees to compensate financial professionals and others who sell fund shares and to pay for advertising, the printing and mailing of prospectuses, and the printing and mailing of sales literature. Shareholder Service Fees are fees paid to persons to respond to investor inquiries and provide investors with information about their investments.
• Other Expenses - Fees paid out of ETF assets that are not already included under Management Fees or Distribution or Service (12b-1 Fees) (such as any shareholder service expenses that are not already included in the 12b-1 fees), custodial expenses, legal and account expenses, transfer agent expenses and other administrative expenses.

Unit Investment Trusts ("UITs")

• Sales Charges - An initial sales charge is typically assessed at the time of your initial purchase. Adeferred sales charge may also be deducted from the trust assets on a monthly basis.
• Creation & Development Fee - A fee generally paid from the trust assets at the end of the initial offering period to cover the sponsor’s cost of developing the trust and organizing the portfolio offering.
• Trust Operating expenses - An annual fee used to pay for the administration of the trust includingadministration, bookkeeping, supervision of the portfolio, and other operating expenses.

Annuities

• Surrender charges - If you withdraw money from an annuity within a certain period after a purchase payment (typically within six to eight years, but sometimes as long as ten years), the insurance company will usually assess a "surrender" charge, which is a type of sales charge. This charge is used to pay your financial professional a commission for selling the annuity to you. Generally, the surrender charge is a percentage of the amount withdrawn, and declines gradually over a period of several years, known as the "surrender period." For example, a 7% charge might apply in the first year after a purchase payment, 6% in the second year, 5% in the third year, and so on until the eighth year, when the surrender charge no longer applies. Often, contracts will allow you to withdraw part of your account value each year, such as 10% of your account value, for example, without paying a surrender charge.
  
  Example: You purchase an annuity contract with a $10,000 purchase payment. The contract has a schedule of surrender charges, beginning with a 7% charge in the first year, and declining by 1% each year. In addition, you can withdraw 10% of your contract value each year free of surrender charges. In the first year, you decide to withdraw $5,000, or one-half of your contract value of $10,000 (assuming that your contract value has not increased or decreased because of investment performance). In this case, you could withdraw $1,000 (10% of contract value) free of surrender charges, but you would pay a surrender charge of 7%, or $280, on the other $4,000 withdrawn.
• Mortality and expense risk charge - This charge is equal to a certain percentage of your account value, typically in the range of 1.25% per year. This charge compensates the insurance company for insurance risks it assumes under the annuity contract. Profit from the mortality and expense risk charge is sometimes used to pay the insurer's costs of selling the annuity, such as a commission paid to your financial professional for selling the annuity to you.
  
  Example: Your annuity has a mortality and expense risk charge at an annual rate of 1.25% of account value. Your average account value during the year is $20,000, so you will pay $250 inmortality and expense risk charges that year.
• Administrative fees - The insurer may deduct charges to cover record-keeping and other administrative expenses. This may be charged as a flat account maintenance fee (perhaps $25 or $30 per year) or as a percentage of your account value (typically in the range of 0.15% per year).
  
  Example: Your annuity charges administrative fees at an annual rate of 0.15% of account value. Your average account value during the year is $50,000. You will pay $75 in administrative fees.
• Underlying Fund Expenses - You will also indirectly pay the fees and expenses imposed by the mutual funds that are the underlying investment options for your annuity.
• Fees and Charges for Other Features - Special features offered by some variable annuities, such as a stepped-up death benefit or a guaranteed minimum income benefit often carry additional fees and charges.

Tax-Free “1035” Exchanges

Variable Universal Life Insurance

• Sales fees imposed on premiums. Sales fees are a percentage of the amount paid. They reduce the amount of your premium payment applied to the policy. They typically compensate the insurance company for sales expenses.
• Surrender charge. This fee applies if you surrender the policy or make a withdrawal in the early years of the contract. It compensates the insurance company for sales expenses that it would other wise not recover in the event of early surrender. Be sure to check the length of your surrender charge period when evaluating a policy.
• Mortality and expense (M&E) risk fees. These ongoing fees are equal to a certain percentage of your account value. They help cover the risks the insurance company assumes with respect to the policy.Risks might include that the policy owner may die sooner than expected, that administrative and sales costs are higher than expected, and that policy owner behavior does not match the insurance company’s expectations.
• Cost of insurance. This ongoing fee varies for each insured based on factors including the insured person’s age, gender, health, and death benefit amount. It compensates the insurance company for providing the death benefit.
• Administration fees. These ongoing fees help cover the insurance company’s costs of issuing and administering the policy, and activities such as processing claims, maintaining records and communicating with you. They may be charged as a flat account maintenance fee or as a percentage of your account value.
• Loan interest. If a policy permits you to take loans, you will be charged interest on any loan amount outstanding.
• Underlying Fund Expenses. You will also indirectly pay the ongoing fees and expenses for the mutual funds that are the underlying investment options for your variable life insurance. These fees are in addition to the fees charged by the insurance company and are reflected in the performance of the investment options.
• Fees and Expenses for Optional Features. Policies may offer a number of additional features for an additional fee, as described further in this bulletin. The fees and expenses may vary significantly based on the type of features offered and/or based on the individual insured.
• Transaction fees. These fees cover services you request. Some policies assess fees for transactions like transferring money among investment options, partial withdrawals, increasing or decreasing the face amount, or providing additional reports (such as policy illustrations).