There are a few different ways to reduce the amount of initial sales charge paid when investing in Class A shares of Davis Funds.
Please note that Davis Funds must be made aware by either the shareholder or brokerage firm/financial consultant if the shareholder wishes to take advantage of certain sales charge reduction privileges. Failure to do so may result in not receiving a reduced initial sales charge for a purchase(s).
Listed below are the ways a shareholder could reduce the sales charge on their investments in Class A shares.
Rights of Accumulation (ROA)
Rights of Accumulation (ROA) allow shareholders to link any Davis Fund account1 in Class A, B and C shares in order to reach a breakpoint for a Class A purchase. For example, a shareholder may have an IRA account in New York Venture Fund Class A and an individual retail account in the Opportunity Fund, Class B. The shareholder could mail in a written request to link these two accounts together for Rights of Accumulation. When the shareholder makes a purchase into the IRA (Class A shares), the system will determine if the combined value of both accounts makes the purchase eligible for a breakpoint.
Some important elements of Rights of Accumulation:
- Eligible Accounts. Please see Aggregating Accounts below.
- Request must be in writing. The shareholder must request this option in writing with a list of all the account numbers that the shareholder would like to link and signed by all shareholders. This request may come in the form of a letter, on the application form when the account(s) is/are first being established, or on an Account Service Form.
- How the system calculates account values. The total account values (including appreciation, capital gain reinvestments, and dividend reinvestments) are used toward reaching a breakpoint. The current value of all accounts linked is based on Public Offering Price (POP), not Net Asset Value (NAV).
It is important to note that since ROA is based on account value and not dollars invested it is possible that in a down market accounts could depreciate. This means that a shareholder that may have been eligible on a certain date for a breakpoint may find that due to depreciation they may not be eligible on a different date. Redemptions could also affect breakpoint reductions for purposes of ROA.
Statement of Intention (SOI)
A Statement of Intention is a contract in which a shareholder states that they intend to invest a specific dollar amount in one or more Class A share accounts over a 13 month period (no extensions allowed).2
Some important elements of Statement of Intention:
- Request must come in writing. The shareholder must request this option in writing with a list of all the account numbers that the shareholder would like to link and signed by all shareholders. The shareholder(s) should indicate what breakpoint they intend to meet within the 13 month period. This request may come in the form of a letter, or on the Application Form when the account(s) is first being established, or on an Account Service Form.
- Assessing Breakpoints. Each purchase made under the Letter of Intent receives the breakpoint and reduced sales charge at the time of purchase. Remember, Money Market purchases DO NOT count.
- Escrow. In the event that the shareholder(s) is unable to complete the agreement, up to 5% of the LOI amount is held in Escrow. This guards the Fund against a loss and will be used to reimburse the Fund and the broker if the shareholder does not fulfill the contract. The Escrowed shares are eligible for dividend and capital gains distributions and are considered part of the overall account balance. Upon fulfillment of the contract the Escrow status will be removed.
- Reminder Letter. A reminder letter is sent to the shareholder(s) in the 11th month of the SOI period if the contract has not yet been fulfilled. If the SOI is not completed within the 13 month period the shareholder will be charged for the difference in sales charge. This can be paid directly by the shareholder or taken out of the Escrowed shares.
- 90 Day Prior Purchase Privilege. Upon a shareholder(s) request, the SOI privilege will extend back to any purchase made during the last 90 days prior to the agreement being established. This means any purchases made within 90 days prior to the SOI going into effect will be counted toward satisfying the contract.
- Eligible Transactions. Only the amounts actually invested in the account(s) count towards fulfilling a SOI. Appreciation and reinvested dividends and capital gains are excluded from counting towards satisfying an SOI. Redemptions are also taken into consideration. If the shareholder(s) invests the amount necessary to fulfill the contract before the 13 month contract period has elapsed then the shareholder will be considered to have fulfilled the contract.
Shareholders may aggregate (link) accounts for Rights of Accumulation or Statement of Intention privileges. Please see below for eligible account registrations that can be aggregated:
- A shareholder may aggregate investments in Davis Funds made by a shareholder or their immediate family: their spouse, or minor children (under the age of 21).
- Trust accounts established by the above individuals. However, if the person(s) who established the trust is/are deceased, then the trust account may only be aggregated with accounts of the primary beneficiary of the trust.
- Solely controlled business accounts.
- Single participant retirement plans.
- In addition, organized groups can also aggregate accounts as long as a group is organized for a purpose other than buying mutual fund shares.
In regards to employee benefit plans where shares may be bought through a trust or fiduciary accounts and Individual Retirement Accounts (IRAs) of a single employer, the purchases will be treated as single purchases.
Combining Rights of Accumulation (ROA) with Statement of Intention (SOI)
A shareholder can use a SOI and ROA in conjunction with one another; the SOI will take precedence over the ROA. Once the SOI has been satisfied, any new purchases into any of the linked Class A share accounts will receive the reduced sales charge. Again, Money Market Fund accounts do not count toward either privilege nor do accounts invested in R or Y share classes.
Class A Shares Sales Charges
for all Davis Funds except Davis Government Money Market Fund
|Amount of Purchase
|Sales Charge percentage of offering price
|Sales Charge approximate percentage of net amount invested
|Amount of Sales Charge Retained by Dealer percentage of offering price
|$100,000 - $249,999
|$250,000 - $499,999
|$500,000 - $749,999
|$750,000 - $999,999
|$1 million or more*
Follow Davis Advisors
You pay no front-end sales charge on purchases of $1 million or more, but if you sell those shares (in any Davis Fund other than Davis Government Money Market Fund) within the first year, a deferred sales charge of 0.50% may be deducted from the redemption proceeds.
Except Money Market accounts, unless the shares were exchanged from another Davis Fund and the shares were previously subject to a sales charge.
Shares purchased into the Davis Government Money Market Fund do not count toward completing a Statement of Intention.