Brokerage Disclosures
T. Rowe Price and Pershing are members of the Securities Investor Protection Corporation® (SIPC®). As a result, securities in client accounts are protected by SIPC up to $500,000 (of which $250,000 can be claims for cash awaiting reinvestment). For details, please go to sipc.org. Please note that SIPC does not protect against any loss due to market fluctuation. In addition to SIPC protection, Pershing provides coverage in excess of SIPC limits from certain underwriters at Lloyd's, in conjunction with another commercial insurance company. The excess of SIPC coverage provides the following protection for assets held in custody by Pershing and its London-based affiliate, Pershing Securities Limited:
An aggregate loss limit of $1 billion for eligible securities—over all client accounts.
A per-client loss limit of $1.9 million for cash awaiting reinvestment—within the aggregate loss limit of $1 billion.
An excess of SIPC claim would only arise when Pershing failed financially and client assets for covered accounts, as defined by SIPC (for Pershing LLC accounts) or the Financial Services Compensation Scheme (FSCS) (for Pershing Securities Limited accounts), cannot be located due to theft, misplacement, destruction, burglary, robbery, embezzlement, abstraction, failure to obtain or maintain possession or control of client securities, or failure to maintain the special reserve bank account required by applicable rules.
The leaders of the excess of SIPC coverage program are certain underwriters of the Lloyd's insurance market. Lloyd's currently holds A+ ratings from Fitch Ratings and Standard & Poor's® (S&P®), and an A rating from A.M. Best. These ratings are based on the financial strength of the company and are subject to change by the rating agencies at any time.
Neither SIPC protection nor the additional excess of SIPC insurance policy protect against loss due to market fluctuation of investments.
For more information about Lloyd's, please see lloyds.com, sipc.org.
T. Rowe Price Group, Inc., the ultimate parent company of T. Rowe Price Investment Services, Inc. (Price), maintains Business Continuity Plans (Plans). The Plans will be updated as necessary and reviewed annually.
The Plans address how Price will handle disruptive events (Events) of varying scope (e.g., an internal business disruption, an external business disruption, an Event during business hours, and an Event during nonbusiness hours). The Plans include backup facilities for critical data and systems, as well as for critical employees. The Plans are designed to continue business operations if an Event should occur. Price has two call centers located in various areas of the country, which allow for continuation of communication with our customers if a site is affected. Price offers three methods for accepting trades: online account access, Tele-Trader touch-tone order-entry system, and speaking to a registered representative. If any one method fails, the Plans provide adequate coverage to meet the demands of Price customers to submit trade orders and inquire about other account service issues. Additionally, Price maintains daily off-site backup for critical systems and data.
If Price experiences a significant business interruption, Price customers may contact Pershing at 201-413-3635 for recorded instructions about the processing of limited trade-related transactions, cash disbursements, and security transfers.
To address interruptions to Pershing's normal course of business, Pershing maintains a business continuity plan that includes geographically dispersed data centers and processing facilities. The plan is annually reviewed 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 in Pershing's control, Pershing's recovery time objective for business resumption is four (4) hours or less, depending on the availability of external resources. In the event that T. Rowe Price experiences a significant business interruption, you may contact Pershing 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 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 T. Rowe Price cannot be contacted due to a significant business interruption, please select the Business Continuity and Other Disclosures link at the bottom of the homepage on the Pershing website at pershing.com or call 201-413-3635 for recorded instructions. If you cannot access the instructions from the website or the telephone number, you may call 213-624-6100 , extension 500, an alternative telephone number for recorded instructions.
At times, certain market segments can experience extremely high volume and high volatility. We urge you to exercise additional care should you decide to trade securities experiencing these unusual pressures. For instance, a characteristic of fast-moving market segments is that executions and subsequent confirmations can be delayed. Please consider using techniques such as using limit orders to help manage the heightened risk inherent in these markets. And while it is always important to keep your long-term investment goals and your risk tolerance in mind, it is particularly relevant during times of unusual market stress.
When personal investors enter an order through an online trading system, they generally are sending the order to their broker. In these cases, the online trading system is not a direct link to the exchanges or market makers. During time periods with unusually high volumes, there may be delays in order execution.
Qualified investors who want to explore more aggressive opportunities can take advantage of margin and options trading. Margin and options trading involves additional risks and are not suitable for all investors.
Pursuant to SEC Rule 605, T. Rowe Price Investment Services, Inc. (Price) makes available for each calendar quarter a report of the routing of certain orders in securities covered under the rule. Because Price transmits all of its customer orders to Pershing, LLC, member NYSE/FINRA/SIPC, a subsidiary of The Bank of New York Mellon Corporation, as clearing broker, and Pershing in fact makes the routing decisions concerning those orders, we believe that Pershing is in the best position to prepare a quarterly report that reflects Pershing's routing practices of orders.
To request either the most recent quarterly report or an account-level report on trades placed in the last six months, please specify your desired report and send your request to:
T. Rowe Price Brokerage Services, Attn.: Customer Service, P.O. Box 17435, Baltimore, MD 21297-1435
To access a report of our Order Routing Practices, type "T.Rowe Price" (with no space between "T." and "Rowe") in the text box that appears after clicking on the following link.
As the largest nongovernmental regulator for securities firms doing business in the United States, the primary role of FINRA is to enforce equitable rules of securities trading, standardize industry practices, and provide a representative body to consult with the government and investors on matters of common interest. FINRA was created in July 2007 through the consolidation of NASD and the member regulation, enforcement, and arbitration operations of the New York Stock Exchange.
Breakpoint Discounts and Other Disclosures Relating to Mutual Fund 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 provides 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 T. Rowe Price and review each mutual fund’s prospectus and statement of additional information (which are available from T. Rowe Price) to obtain the specific information regarding the charges and breakpoint discounts associated with a particular 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 Class C shares usually do not carry any front-end sales charges. Instead, investors who purchase Class B or Class 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 also may 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."
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 a Letter of Intent (LOI). Mutual funds have different rules regarding the availability of ROA and LOI. Therefore, you should discuss these matters with T. Rowe Price 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, another fund within 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 those accounts to qualify for a breakpoint discount, you must advise T. Rowe Price 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 T. Rowe Price or review the mutual fund’s prospectus or 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 T. Rowe Price about these accounts. You may need to provide documentation to T. Rowe Price 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 T. Rowe Price and review the mutual fund’s prospectus and statement of additional information to determine whether the mutual fund uses either NAV or historical costs to determine breakpoint eligibility.
Letters of Intent
Most mutual funds allow investors to qualify for breakpoint discounts by signing an LOI, which commits the investor to purchase 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 with T. Rowe Price 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 affect your decision regarding the appropriate share class in which to invest. Therefore, you should discuss the availability of breakpoint discounts with T. Rowe Price 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 also can review the investor alerts that are available on the FINRA website at finra.org/investoralerts.
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 in lieu of clearance charges assessed to T. Rowe Price. Participation by T. Rowe Price in this program is optional, and T. Rowe Price may share with Pershing in such fees. These fees may be considered revenue sharing, are a significant source of revenue for Pershing, and may be a significant source of revenue for T. Rowe Price. 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 on a flat fee per holding, or a percentage of assets 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 and 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 regarding Pershing’s mutual fund no-transaction-fee program or a listing of funds that pay Pershing networking or omnibus fees, please refer to pershing.com. Pershing also receives distribution fees in the form of 12(b)-1 fees, which may also be shared.
Summary
The T. Rowe Price Brokerage Dividend Reinvestment Service is made available to your account through Pershing LLC (Pershing), a subsidiary of The Bank of New York Mellon Corporation. Pershing is carrying your account as a clearing broker by arrangement with T. Rowe Price Brokerage. If you elect to participate, T. Rowe Price Brokerage will automatically reinvest your cash dividends (and certain other cash distributions) paid on eligible securities in your account in additional nonpublicly traded shares of the same securities. You may request automatic dividend reinvestment for all eligible securities in your account, or you may select individual stocks for dividend reinvestment. Pershing will act on your behalf on instruction from your T. Rowe Price Brokerage registered representative. This service is provided to customers free of charge.*
Provision of Dividend Reinvestment Services
Your enrollment in our Dividend Reinvestment Service becomes effective on the first business day after you elect to enroll and we receive your account application. When your enrollment becomes effective, you agree to be bound by these Dividend Reinvestment Service Terms and Conditions as well as any other Account Agreements that you have with T. Rowe Price Brokerage.
You may choose the Dividend Reinvestment Service for all eligible securities in your account, or you may select individual securities for automatic dividend reinvestment by calling T. Rowe Price Brokerage. If you request automatic dividend reinvestment for all eligible securities in your account, this standing instruction will apply to all present and future eligible securities. If, however, your original instructions were to reinvest dividends on specific eligible securities, and you purchase or deposit a new stock(s) into your account, you must give new instructions to enroll the stock(s) in Dividend Reinvestment or dividends will not be reinvested. Any stock(s) not specified for Dividend Reinvestment will not be enrolled in the service. To add or remove the service with respect to securities in your account, you must notify a registered representative at least five business days prior to the day on which dividends or other eligible cash distributions are payable for those securities. Dividends are reinvested on all securities you have selected that you own on the record date for determining shareholders eligible to receive dividends, as long as you still own any whole shares of such securities on the dividend payable date. Dividend reinvestment does not assure profits on your investments and does not protect against loss in declining markets.Eligible Securities
Most securities listed on the New York Stock Exchange, the American Stock Exchange, or traded on the National Association of Securities Dealers Automated Quotation System (Nasdaq) are eligible for the Dividend Reinvestment Service. Non-listed foreign securities, American Depositary Receipts, nonpublicly traded limited partnerships, preferred issues, and short positions are not eligible. However, Pershing reserves the right to make certain currently noneligible securities eligible in the future without prior notification.Eligible Cash Distribution for Reinvestment
Most cash distributions on eligible securities (eligible cash distributions) selected for participation in our Dividend Reinvestment Service may be reinvested, including ordinary dividends and capital gain distributions. Cash-in-lieu payments and certain special dividend payments, however, cannot automatically be reinvested. You may not combine eligible cash distributions with any funds you deposit into your account to make automatic reinvestment purchases.Dividend Reinvestment Transactions in Eligible Securities
If the record date for the dividend is at least five business days prior to the dividend pay date, on the payable date, your account will be credited the amount of the cash distribution. This amount will then be debited from your account and the appropriate number of full and fractional shares will be credited to your account. However, if the record date for the dividend is less than four business days prior to the dividend pay date, Pershing will attempt to purchase the reinvestment shares on the first trading day after the record date. On the settlement date, your account will be credited the amount of the cash distribution, debited the amount equal to the cost of the whole and fractional shares purchased, and subsequently allocated the appropriate number of reinvested shares. If shares cannot be purchased after three attempts, you will receive a cash distribution. You will not receive a confirmation for these transactions. You will be able to review all of the information about each transaction that would normally appear on your confirmation, along with your current reinvestment instructions, on your Brokerage statement. You may also contact us on the payable date (or any date thereafter) for current information regarding the transactions.
The shares are purchased through open market purchases prior to the payable date. Pershing will calculate the number of shares to be purchased for the selected security by determining the cash distribution to be received by each individual requesting reinvestment. Pershing will then combine your cash dividend with other individuals requesting reinvestment in the same underlying security and purchase the amount of whole and fractional shares required to satisfy each individual. If the transaction cannot be completed in one trade, you will receive the average weighted price paid by Pershing. When you sell your entire position, you will receive the same price on your fractional portion as you did for your whole share portion. For transfers, only the whole share portion will be moved, and you will receive the previous business day’s closing price for the fraction. Pershing may purchase the securities from Pershing LLC. Pershing may, without prior notification, choose to make a security eligible or ineligible.Partial Shares
Automatic reinvestment of your eligible cash distributions may give you an interest in partial shares, which we will calculate to four decimal places. You will be entitled to receive dividend payments proportionate to your partial share holdings. If an account is transferred, if a stock undergoes a reorganization, or stock certificates are ordered out of an account, partial share positions, which cannot be transferred, reorganized, or issued in certificate form, will be liquidated at prevailing market prices. No commission will be charged for these transactions. Timing is subject to our discretion. You will also be entitled to receive proxy voting materials and voting rights proportionate to your partial shares. In mandatory corporate reorganizations, your partial shares will be handled according to the terms of the particular reorganization. In voluntary reorganizations, your instructions will be applied only to your whole shares. In the event of a rights offering to holders of an eligible security, we will cause the rights accruing to all partial shares of that security to be sold.Confirmation and Statements
All transactions made through the Dividend Reinvestment Service will be confirmed on your regular account statement. Pershing acts as an agent in all dividend reinvestment transactions. You may obtain immediate information by calling a registered representative of T. Rowe Price Brokerage.
*Pershing and T. Rowe Price Brokerage may, in the future, charge a transaction fee for Dividend Reinvestment Services.
The following disclosure pertains to estimated annual income (EAI) and estimated current yield (ECY) figures displayed on 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 their accuracy. Because 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 a projected methodology (PM), depending on the information provided by the issuer. The PM annualizes the latest regular cash dividend. The HM accumulates the regular cash dividends over the past 12 months. If there is less than one year of dividend history, the accumulated dividends are annualized. 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 EAI for preferred securities is computed by using the PM.
The following are important caveats to the HM and PM figures:
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 that are 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), ADR preferred, or exchange-traded fund that rescinds or omits a dividend payment; and a security from an issuer that 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 often 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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Brokerage accounts are offered by T. Rowe Price Investment Services, Inc., member FINRA/SIPC. Brokerage accounts are carried by Pershing LLC, a BNY Mellon company, member NYSE/FINRA/SIPC.
All investments are subject to market risk, including the possible loss of principal; they are subject to management fees and expenses.