Disclosure Information
Edward Jones receives payments known as revenue sharing from certain mutual fund companies, 529 plan program managers, insurance companies and retirement plan providers (collectively referred to as “product partners”). Virtually all of Edward Jones’ transactions relating to mutual funds, 529 plans, insurance products and retirement plans involve product partners that pay revenue sharing to Edward Jones. We want you to understand that Edward Jones’ receipt of revenue sharing payments creates a potential conflict of interest in the form of an additional financial incentive and financial benefit to the firm, its financial advisors and equity owners in connection with the sale of products from these product partners. For the year ended December 31, 2009, Edward Jones received revenue sharing payments of approximately $94.2 million from mutual fund and 529 product partners and $30.7 million from insurance product partners. For that same period, Edward Jones’ net income was $164.3 million.
Revenue sharing, as received by Edward Jones, involves a payment from a mutual fund company’s adviser or distributor, a 529 plan program manager, an insurance company or the entity that markets an insurance contract, or a retirement plan provider. It is not an additional charge to you. These payments are in addition to standard sales loads, annual sales fees, expense reimbursements, sub-transfer agent fees for maintaining client account information and providing other administrative services for mutual funds (shareholder accounting and networking fees), and reimbursements for education, marketing support and training-related expenses.
Some product partners pay Edward Jones a fee based on the value of assets under management, known as an asset-based fee. For example, if you made a $10,000 purchase of an investment, held it for a year, and its value remained the same, Edward Jones would be paid by the product partner .075% or 7.5 basis points. That would translate to a $7.50 payment from the product partner to Edward Jones for the $10,000 investment in your account. For every subsequent year you held that $10,000 investment in your Edward Jones account, the product partner would make a $7.50 payment to Edward Jones, assuming no change in the value of your investment. Asset-based payments will increase or decrease from year to year with changes in the value of the related assets held by Edward Jones’ clients.
Other product partners may pay Edward Jones a one-time fee based on the amount of the product sold. This approach is referred to as a sales-based fee and is based on the dollar value of your purchase. For example, the product partner may pay Edward Jones .125% or 12.5 basis points for each dollar you invest or use to purchase a product. Therefore, if you made a $10,000 investment, the product partner would pay Edward Jones $12.50 for that transaction.
Most, but not all, of the product partners that pay revenue sharing to Edward Jones have been designated as preferred product partners by Edward Jones. This designation means that Edward Jones has determined these product partners have a broad spectrum of investment and insurance solutions designed to meet a variety of client needs. Edward Jones grants preferred product partners greater access to certain information about its business practices. In addition, these product partners have frequent interactions with our financial advisors to provide training, marketing support and educational presentations. Non-preferred product partners that pay revenue sharing may receive similar treatment. With regard to insurance, Edward Jones’ financial advisors have limited access to the products and services of other insurance carriers. Additionally, while Edward Jones financial advisors may sell, and our clients are free to select, funds from many mutual fund families, we exclusively promote mutual fund preferred product partners on our website. The vast majority of mutual funds, 529 plans, insurance products and retirement plans sold by Edward Jones involve preferred product partners, and, as noted above, each of these product partners pays revenue sharing to Edward Jones. The names of preferred product partners are shown in bold and italics on the following revenue sharing summary tables.
Please review the following revenue sharing summary tables, which provide detailed information and disclosures concerning Edward Jones’ revenue sharing arrangements.
Detailed information and disclosures concerning revenue sharing received from product partners are included in the following revenue sharing summary tables. Revenue sharing paid in connection with mutual fund-based retirement plans is included in the "Mutual Fund Companies: Revenue Sharing Summary" table. Revenue sharing paid in connection with group annuity-based retirement plans is included on the "Insurance and Annuity Product Providers: Revenue Sharing Summary" table.
For additional information on a particular product partner’s payment and compensation practices, please review the applicable prospectus, statement of additional information or offering statement.
