Mutual Fund Investment and Compensation Disclosure

Investing in Mutual Funds at OneAmerica Securities, Inc.

Mutual Funds may provide an attractive way for investors to meet their financial objectives. As with any investment, when investing in mutual funds it is important to consider the risks and objectives of a particular mutual fund and match them to your own investment objectives and risk tolerance. It is also important to understand the costs associated with investing in mutual funds and how OneAmerica Securities, Inc. and your registered representative are compensated on your investment.

Some key factors to consider when investing in mutual funds include a mutual fund's investment strategy, risk profile, investment performance, and relationship to your overall asset allocation strategy and investment time horizon. A mutual fund's fees and expenses have an impact on the fund's investment returns and are important factors as well.

Mutual Fund Share Classes

Many mutual funds impose a sales charge at the time of purchase that is paid from and reduces the amount invested. While others may charge a fee at the time the shares are sold. These charges are sometimes referred to as "sales loads." The sales load will vary from fund company to fund company, and may also vary for different funds within the same family of funds. A part of the sales load is paid to OneAmerica Securities, Inc. and your registered representative. The compensation paid by OneAmerica Securities, Inc. to its registered representatives for the sale of mutual funds does not favor one fund or fund family over another.

Generally mutual funds are purchased in share classes as described below.

Class A Shares

Class A shares typically have a sales load that is paid by the investor at the time the fund is purchased. The amount of the sales load is expressed as a percentage of the mutual fund's public offering price and is deducted from the amount invested when purchased. Sales charges are typically up to 4.5 percent for fixed income funds and 5.75 percent for stock funds. For larger investment amounts, sales load discounts, also known as "breakpoints" may reduce the amount of the sales load paid. Investors in Class A shares will also pay ongoing expenses charged by the mutual fund.

Class B Shares

Class B shares are not assessed an initial sales load at the time of purchase, allowing the entire purchase amount to be invested in the fund. However, if you sell your mutual fund shares within a predetermined time period, you will be assessed a charge called a "Contingent Deferred Sales Charge" or CDSC. The time period is typically 4 - 8 years with an amount up to 5.00 percent. The amount of the CDSC declines the longer you own your shares. Class B shares have higher ongoing internal expenses than Class A shares that will reduce your returns by the amount the Class B share internal expenses exceed the Class A internal expenses. Usually when the CDSC time period expires, the Class B shares convert to Class A shares allowing you to pay the lower Class A ongoing internal expenses.

Class C Shares

Class C shares usually do not pay an initial sales load and may assess a CDSC, if sold within a short period of time, typically 12 to 18 months from purchase. The CDSC for Class C shares is usually a maximum of 1.00 percent. Class C shares charge higher internal expenses than Class A shares. Class C shares do not convert to Class A shares so that the higher internal expenses continue throughout your ownership. Class C shares typically have the highest internal expenses.

Sales Load Discounts, Rights of Accumulation and Letters of Intent

Most mutual fund families offer reduced sales loads for Class A shares purchased in the same fund family, if certain investment levels are met. These reduced sales loads or discounts are referred to as "breakpoints." For example a fund charging 5.5 percent may reduce the sales load to 5.00 percent for amounts of $50,000.00 or more, and further reduce the sales load at $100,000.00, $250,000.00 and so on.

Many mutual fund families also allow investors to aggregate their holdings with other accounts held by the investor or certain family members to also qualify for breakpoint discounts. These discounts for aggregating holdings are known as "rights of accumulation."

In addition, many funds also allow for discounts where a commitment is made to purchase a predetermined amount over certain periods of time, usually 13 months, to also qualify for a breakpoint discount. This is known as a "letter of intent." If the investor does not meet the committed amount, within the time period, the breakpoint discount will be reversed by the fund company by selling enough of the investor's fund holdings to meet the difference.

Because many investors or qualifying family members own mutual funds through more than one source, it is important to inform your registered representative of these holdings to help determine if you qualify for any breakpoint discounts.

How Mutual Fund Compensation is Paid to OneAmerica Securities, Inc. and Your Registered Representative.

OneAmerica Securities, Inc. and our registered representatives receive compensation when clients invest in mutual funds. Depending upon the mutual fund share class, compensation may be a sales load paid when purchased, a concession from a mutual fund company, ongoing asset based sales charges known as "trails" and commonly referred to as 12b-1 marketing support and servicing fees or an investment management fee if mutual funds are purchased in a fee-based account.

OneAmerica Securities, Inc. method of compensating registered representatives for mutual fund sales does not favor one fund or fund family over another.

Our registered representatives may also indirectly receive additional non-cash compensation as a result of fixed dollar amounts paid to OneAmerica Securities, Inc. or its affiliates by mutual fund companies or their distributors. These payments are used for supporting general business purposes such as marketing seminars, training and educational conferences or entertainment that our registered representatives may participate in.

In addition, American United Life Insurance Company® (AUL), a OneAmerica Securities, Inc. affiliate may also provide marketing, distribution, administrative or operational services on behalf of mutual funds available as investment options for its proprietary variable life insurance and variable annuity products. AUL incurs direct and indirect expenses as result of providing these services and may be reimbursed or paid compensation by the mutual fund company advisors or distributors for these services. These payments may also be used for supporting general business purposes such as marketing seminars, training and educational conferences or entertainment that our registered representatives may participate in.

Not all mutual fund companies or their distributors provide additional marketing and support compensation to OneAmerica Securities. Our registered representatives are not required to recommend any fund providing such marketing and support compensation, nor do they directly share in any of the marketing or support compensation received by OneAmerica Securities or American United Life Insurance Company.

The mutual fund companies or their distributors that paid OneAmerica Securities, Inc. marketing and support compensation for 2007 are as follows:

  • AIM Investments
  • Alger
  • AllianceBernstein
  • Allianz Global Investors
  • American Century Investments
  • American Funds
  • Fidelity Investments
  • Fred Alger Management, Inc.
  • Goldman Sachs
  • Illinois Mutual
  • Janus Funds
  • Janus Capital Group
  • Neuberger Berman
  • Old Mutual
  • OppenheimerFunds
  • PIMCO
  • Pioneer Investments
  • Principal Financial Group
  • Russell Investments
  • State Street Global Advisors
  • T. Rowe Price
  • The Timothy Funds
  • Thornburg Investment Mgt
  • Vanguard
  • Wells Real Estate Funds

Additional Information

You should discuss your particular needs with your registered representative to determine the fund that may be best suited for your investment needs.

Please see each fund's Prospectus or Statement of Additional Information SAI) for additional information particular to that fund. The mutual fund prospectus and SAI discusses the different share classes available, breakpoint discounts, as well as ongoing fees and expenses such as operating expenses, management fees, 12b-1 fees, servicing fees and any other expenses. These fees and expenses are deducted from the fund's assets, thereby reducing overall investment returns.

Additional information may be available from various securities industry regulatory or trade organizations such as the Financial Industry Regulatory Authority through their website http://www.finra.org/InvestorInformation/index.htm