Revenue-Sharing Disclosure

AIG Financial Advisors’ Disclosure Document for Mutual Fund, Variable Product, Real Estate Investment Trust, Direct Participation Program, Third Party Money Manager Investors and Expense Reimbursements

If you invest in mutual funds, variable products, 529 plans, direct participation programs (DPPs), retirement plans, or real estate investment trusts (REITs), this disclosure document will help you understand these investments, the costs associated with investing in each of these products, how your financial advisor is compensated when you buy these products, and how AIG Financial Advisors (“AIGFA”) is compensated by mutual fund families, insurance companies, DPP sponsors, and REIT sponsors to sell their products.  In addition, this disclosure addresses the use of third party money managers, the costs associated with using such managers, how your financial advisor is compensated when he or she uses a third party money manager, and how AIGFA is compensated by the money manager.

AIGFA and your financial advisor are dedicated to ensuring that you invest in the mutual funds, variable products, 529 plans, DPPs, or REITs and/or third party money managers that best suit your investment needs, risk tolerance and time horizon.

Mutual Funds

Mutual Fund Investing

A mutual fund is an investment vehicle that purchases stocks, bonds and other securities on behalf of its shareholders.  Investments from many investors are combined, or pooled, in a single portfolio that is managed by a professional manager.  Funds invest in a variety of investments, including U.S. or international stocks, bonds, money market instruments.  Individual investors own shares of the fund, while the fund company (investment company) owns the underlying investments. 

In order to be an informed investor in mutual funds, you should carefully read the informational documents known as a “Prospectus” and “Statement of Additional Information”, which are provided by the fund.  You also should discuss your investment goals and objectives with your financial advisor.  Finally, we suggest you visit the educational Web sites of the Securities and Exchange Commission (www.sec.gov), the FINRA (www.FINRA.org), the Securities Industry and Financial Markets Association (www.sifma.org), and the Investment Company Institute (www.ici.org), for additional information on mutual funds. 

Costs of Investing in Mutual Funds

It is important that you understand the fees and expenses associated with such investments.  All mutual funds have fees and expenses.  They have ongoing expenses that you will pay as long as you have an investment in the fund.  Most funds also require that you pay a sales commission when you buy or sell the fund.  The costs of buying or selling shares of a fund, plus the annual costs you pay that are associated with operating the fund, affect the return on your investment.  Understanding these fees and expenses therefore will assist you in identifying the best investment for your particular needs and may help you reduce the costs of your investment.

This disclosure document will give you general background information about the fees and expenses associated with the mutual funds sold by AIGFA.  However, sales charges, expenses, management fees, and breakpoint discounts vary from mutual fund to mutual fund.  You should therefore discuss these fees and expenses with your financial advisor and review each fund’s prospectus and statement of additional information to get the specific information regarding the fees and expenses associated with a particular mutual fund.
Mutual fund fees generally fall into two categories: loads (sometimes called sales charges) and annual fund operating expenses.  Both are disclosed annually in the fee table in the front of a fund’s prospectus and may be incurred when you buy a fund, while you own a fund, or when you sell a fund.

“Loads” or Sales Charges

Loads or sales charges compensate the fund company, AIGFA and your financial advisor.  Sales charges are either “front-end” (charged when you buy shares) or “back-end” (charged when you sell).  A back-end charge is also called a contingent deferred sales charge because the longer you hold your shares, the more the charge declines, ultimately to zero. 

The reason behind the different sales charges is for mutual funds to be able to offer different pricing arrangements to meet the needs of different investors.  Most mutual funds make this possible by offering investors various “classes” of shares.  Although each share class represents a similar ownership interest in the mutual fund, each has different fees and expenses, which would affect your investment returns.  While there are many different classes of mutual funds, the most common are Class A, Class B and Class C.

Class A shares generally have a front-end sales charge that is deducted from your investment at the time you buy fund shares.  The operating expenses are also generally lower for A shares than B or C shares.  The sales charge is a percentage of your total purchase.  If, for example, you have $10,000 to invest in a fund and the front-end sales charge is 5 percent, you would be charged $500, and the remaining $9,500 would be invested in the chosen fund.  You should also keep in mind that each fund family has “breakpoint” discounts for large investments to the front-end sales charge assessed on A shares.  This means that as the size of your total investment within a fund family increases, the sales charge may decrease.  For example, a fund might charge a load of 5.75% for purchases under $50,000, reduce the load to 4.5% for purchases at or above that amount but less than $100,000, and still further reduce or eliminate the load at other higher levels.

You may be able to qualify for a breakpoint on the basis of a single purchase, or by aggregating the amounts of more than one percent by using a “letter of intent” or a “right of accumulation”.  A letter of intent is a letter you sign stating your intent to buy a certain amount of shares over a particular period of time.  A right of accumulation allows you to qualify for a breakpoint with respect to a current purchase, based upon the total amount of your previous purchases.  In either case, purchases may qualify for a breakpoint if they are made in your account or in accounts that are related or linked to your account.  You may also qualify based upon purchases that are made in the same fund or in different funds that are within the same fund family.  Your financial advisor or the fund prospectus can provide additional information on ways to reduce or eliminate the sales charge.

Class B shares typically do not have a front-end sales charge and therefore do not have breakpoints.  B shares, however, generally have higher annual operating expenses than A shares.  Class B shares also normally have a back-end sales charge, which you would pay if you sell your shares within a specified number of years.  The back-end sales charge generally declines over time and is usually eliminated after the seventh or eighth year.  B shares normally convert to A shares at that point, and from then on you benefit from lower annual expenses.  In view of the back-end sales charges and lack of breakpoints, investors often find B shares to be the most appropriate when investing modest amounts for longer periods.

Class C shares, like B shares, have no front-end sales charge and have higher annual expenses than A shares.  There generally is no back-end sales charge unless the shares are sold within a one-year period.  Unlike B shares, C shares never convert to A shares.  If you buy a C share, you generally pay as you go.  This means that the expense ratio is typically higher on a C share than on an A share.  Investors who want flexibility and who have a shorter investment time horizon may find that C shares best meet their needs.

To compare expenses by share class, you may wish to review FINRA’s Expense Analyzer at:  http://apps.finra.org/Investor_Information/ea/1/mfetf.aspx.

Operating Expenses

Annual fund operating expenses, or the cost of doing business, include management fees, 12b-1 fees (1), the cost of shareholder mailings and other expenses.  The fund’s prospectus includes the fund’s expense ratio, which helps you compare annual expenses of different funds.  You do not pay operating expenses directly; rather, they are deducted from the fund’s total assets, so they reduce investment returns.  As noted above, the operating expenses of funds are generally lower for A shares than for B or C shares.

Selecting What is Right for You

Selecting the appropriate fund family and share class involves a number of factors, including fund strategies, fund performance history, investment objectives and fees and expenses.  You should review the fund’s informational documents as well as the fund’s share classes to determine and evaluate your options.  We also encourage you to discuss your options with your financial advisor who can assist you in choosing the fund family and share class most suitable for you. 

AIGFA’s Revenue Sharing Disclosure for Mutual Funds

AIGFA offers many mutual funds to investors.  We believe it is important that our registered financial advisors evaluate these funds and assist investors in selecting the funds that best meet their needs. We currently offer mutual funds sponsored by more than 100 companies, but because there are more than 8,000 mutual funds available for sale in the United States, we focus on a select group of some of the largest and most well-known mutual fund families that offer a broad spectrum of investment products.  These sponsors have greater access to our financial advisors to provide training and other educational presentations and product information so that they can serve investors better. 

The following sponsors currently participate in these revenue sharing arrangements:  AIG SunAmerica Asset Management, AIM Investments, AllianceBernstein, Allianz Global Investors, American Funds, Columbia Management, Delaware Funds, Fidelity Investments, Franklin Templeton Investments, Hartford Mutual Funds, Jennison Dryden, John Hancock Funds, ING Funds, MFS, Pacific Life, Putnam Investments, Oppenheimer Funds, Scudder Investments, Van Kampen Investments, and Principal Funds Distributor, Inc.

In addition to the customary sales charges in connection with sales of mutual funds, the sponsors make payments to AIGFA to participate in the program.  First, AIGFA may receive a payment of up to 0.25 percent (25 basis points) of an investor’s total purchase amount of a mutual fund through an AIGFA financial advisor (the “Gross Sales Payment”).  If, for example, an investor invested $10,000 in a fund, AIGFA could be paid up to $25. Alternatively, AIGFA may receive from certain mutual funds a flat fee that does not exceed the Gross Sales Payment.  Second, for as long as the investor holds that fund or another fund within the same fund family into which he or she has exchanged, AIGFA will receive an additional payment, paid quarterly, of up to 0.11 percent (eleven basis points) per year of the amount held (the “Assets Under Management Payment”).  For example, on a $10,000 holding, AIGFA would be paid up to $11.

These payments are made by the sponsors’ distributors, investment advisers or other related entities.  Sponsors and/or their affiliates make aggregate payments based on the formula set forth above.

 As mentioned above, AIGFA is paid by the fund family based on the fees you pay. Then, a portion of that payment goes to your financial advisor. 

How AIGFA and Your Financial advisor are Compensated When You Buy Mutual Funds
AIGFA and your financial advisor are paid in different ways for helping you choose mutual funds, depending on the type of fund, amount invested, share class purchased and fund family used. 

• As mentioned above, AIGFA is paid by the fund family based on the fees you pay.  Then, a portion of that payment goes to your financial advisor. 
• A fund family does not typically pay the entire amount of the up-front load to AIGFA.  For most purchases, AIGFA’s compensation is based on a formula.  For example, if a fund has an up-front load of 5.75%, it may pay AIGFA 5%. This is referred to as the dealer concession to the broker/dealer.
• The compensation formula to determine the amount of payment for your financial advisor is the same regardless of which mutual fund you purchase.  However, some funds may carry higher sales charges and/or higher dealer concession charges than others (as explained above), which may create an incentive for financial advisors to sell such funds.  You should compare funds sales charges and concession charges by looking at the fund prospectus or asking your financial advisor.
• In addition, ongoing payments (known as residuals or trails) on mutual fund shares that are held in your account for more than one year are set by the fund family and generally paid to AIGFA.  AIGFA then pays your financial advisor based on its compensation formula. 
• In other types of accounts (such as fee-based accounts), financial advisor compensation is based on a percentage of the total assets held in the account, rather than concessions or trails.  
• Registered financial advisors of AIGFA do not receive additional compensation from AIGFA in connection with sales of the sponsors’ mutual funds as opposed to other mutual fund families.  However, in connection with sales (but not liquidations) of the sponsors’ mutual funds, AIGFA absorbs the nominal “ticket charge” of up to $15 per transaction, which is normally borne by your financial advisor.  As a result, the compensation payable to the financial advisor would be up to $15 greater than with other funds.  For example, if a client purchased $10,000 of a mutual fund, which had a 4% front-end sales charge, the gross commission payable by the client would be $400 ($10,000 x 4%).  A financial advisor could receive up to 90% of this amount, or $376.  In connection with the sale of a sponsor’s fund, the financial advisor would receive the entire $376.  With a mutual fund not offered by a sponsor, the financial advisor would pay up to a $15 ticket charge out of the commission and receive only $361.  Because of these revenue sharing arrangements, financial advisors may prefer recommending mutual funds offered by the sponsors over other mutual funds available through AIGFA.

You should feel free to ask your financial advisor how he or she will be compensated for any mutual fund transaction and how that compensation may compare with another mutual fund transaction.

Variable Products

AIGFA currently receives revenue sharing payments associated with the sale of two variable products: (1) variable annuities; and (2) variable universal life insurance.

Variable Annuity Investing

A variable annuity is an insurance contract between you and an insurance company. 

A variable annuity offers a range of investment options.  The value of your investment as a variable annuity owner will vary depending on the performance of the investment options you choose.  The investment options for a variable annuity are typically mutual funds that invest in stocks, bonds, money market instruments, or some combination of the three.

• Variable annuities may allow you to receive periodic payments for the rest of your life (or the life of your beneficiary).  This feature offers protection against the possibility that, after you retire, you will outlive your assets.
• Some variable annuities have a death benefit feature that is not available with mutual funds.  If you die before the insurance company starts making payments to you, your beneficiary is guaranteed to receive a specified amount—typically at least the amount of your purchase payments. 
• Variable annuities are tax deferred.  This means that you pay no taxes on the income and investment gains from your annuity until you withdraw your money.  You may also transfer your money from one investment option to another within a variable annuity without paying tax at the time of the transfer.  You should check your variable annuity prospectus, however, for any transfer restrictions.
• Variable annuities have higher charges than mutual funds.  You will pay for each benefit provided by the variable annuity.  Be sure you understand these charges as they will reduce the value of your account and the return on your investment.

The variable annuity prospectus provides detailed information on all of the sub-account investment choices within the variable annuity. We encourage you to read it carefully in order to understand the benefits and risks of variable annuities. You should also consider visiting the SEC’s educational website on variable annuities at: http://www.sec.gov/investor/pubs/varannty.htm and FINRA’s variable annuity site at http://www.finra.org/InvestorInformation/InvestmentChoices/idex.htm

 AIGFA’s Revenue Sharing Disclosure for Variable Annuities

Because of the large number of companies offering these products, we have chosen to focus on a select group of some of the largest and best known, which offer a broad array of products and options.  These sponsors have greater access to our representatives to provide educational and training opportunities.  Sponsors that participate in these revenue sharing arrangements include the following companies:  AIG SunAmerica Retirement Markets, Prudential, AXA Distributors, Hancock, ING Annuities, Jackson National, Lincoln Financial Distributors, Nationwide Financial, Pacific Life, PLANCO/The Hartford, Sun Life Financial, and Allianz.

In addition to the customary sales charges in connection with sales of variable annuities, the sponsors make payments to AIGFA to participate in the program.  AIGFA receives a Gross Sales Payment of up to 0.25 percent (25 basis points).  If, for example, an investor makes a deposit of $10,000, AIGFA would receive up to $25.  In addition to the Gross Sales Payment, for as long as the investor owns the contract, AIGFA will receive an additional payment, paid quarterly, of up to 0.1 percent (10 basis points) per year of the assets under management.  For example, if the value of the contract is $10,000, AIGFA would receive up to $10 per year.  These payments are made by the insurance carrier, distributor or other related entity.

Additionally Pacific Life and AIG SunAmerica Retirement Markets will pay so-called Persistency payments of between 5bps and 25 bps based on a formula determined by contracts with a minimum persistency of 95%, assets in excess of $15 million contracts in effect more than six years. Persistency payments are fees paid by variable annuity companies, through AIGFA based upon the amount of assets in a variable annuity contract managed by your financial advisor, and the length of time the assets have been held in the variable annuity. Under certain circumstances, your representative may receive an additional annual persistency payment based on the same contracts. Persistency payments are not directly charged to your contract.

Variable Universal Life Insurance Product Investing

Variable universal life insurance products share some of the same characteristics as variable annuities. For example, variable universal life insurance is an insurance contract between you and an insurance company.  You purchase a variable universal life insurance product by either a single payment or by multiple payments.  These products are designed to be long-term investments, include a death benefit, and offers a range of investment options.  The value of your investment as a variable universal life insurance product owner will vary depending on the performance of the investment options you choose.  The investment options for a variable annuity are typically mutual funds that invest in stocks, bonds, money market instruments, or some combination of the three. 

Unlike variable annuities, variable universal life insurance products offer a flexible premium schedule and you generally satisfy the premium payment requirement through deductions or sales of the underlying mutual funds in your variable universal life insurance product sub-accounts. Variable universal life insurance product, however, differ from traditional whole life insurance in that cash values are allocated to various sub-accounts, each reflecting investments in particular mutual funds that are separate from the general assets of the insurance company.

AIGFA’s Revenue Sharing Disclosure For Variable Universal Life Insurance

Because of the large number of companies offering these products, we have chosen to focus on a select group of some of the largest and best known, which offer a broad array of products and options.  These sponsors have greater access to our representatives to provide educational and training opportunities.  Set forth below is a listing of sponsors from whom we receive revenue sharing payments. 

Platinum:  AIG American General, John Hancock, Hartford Life, ING, Nationwide, Pacific Life, and Penn Mutual.
Gold: SunLife.

In addition to the customary sales charges in connection with sales of variable universal life insurance, sponsors make payments to AIGFA to participate in the program.  Platinum sponsors pay a marketing allowance of 6% of all first year commission target premium from all sources on permanent plans of life insurance (to include variable universal life, universal life, indexed universal life and whole life products). Any levelized first year commission or spread first year commission products will earn the 6% marketing allowance for the term of the spread commission (i.e.: 3 years, 5 years, etc.). It is expected that the 6% marketing allowance program will generate a minimum of $100,000 of revenue during the calendar year. If the marketing allowance from the sales does not equal $100,000 but at least $75,000 you can change your status to Gold. If the minimum marketing allowance required to remain a Focus Life Carrier is $50,000 and if sales are less the sponsor can: a) pay the difference, or b) drop out of the program.

Gold sponsors pay a marketing allowance of 6% of all first year commission target premium from all sources on permanent plans of life insurance (to include variable universal life, universal life, indexed universal life and whole life products). Any levelized first year commission or spread first year commission products will earn the 6% marketing allowance for the term of the spread commission (i.e.: 3 years, 5 years, etc.). It is expected that the 6% marketing allowance program will generate a minimum of $75,000. If the minimum marketing allowance is not met the sponsor can: a) pay the difference, or b) drop out of the program.

How AIGFA and Your Financial advisor are Compensated When You Buy Variable        Products

AIGFA and your financial advisor are paid in different ways for helping you choose variable products, depending on the type of variable product, amount invested, share class purchased and the age of the client. 

• The compensation formula to determine the amount of payment for your financial advisor is the same regardless of which variable annuity or variable universal life insurance product you purchase. The actual commission rate will depend on the specific product.  
• In addition, ongoing payments (known as residuals or trails) on variable annuities and variable universal life insurance products that are held in your account for more than one year are set by the variable annuity company and generally paid to AIGFA.  AIGFA then pays your financial advisor based on its compensation formula. 
• AIGFA financial advisors do not receive a greater or lesser commission in connection with sales of variable annuities or variable universal life insurance contracts by the sponsors as distinct from other annuity issuers. 

You should feel free to ask your financial advisor how he or she will be compensated for any variable annuity and variable universal life insurance transaction and how that compensation may compare with another variable annuity or variable universal life insurance transactions.

529 Plans

529 Plan Investing

A 529 plan is a savings plan for college education that allows you to accumulate funds and invest them on a tax-preferred basis in order to fund the costs of a college education.  There are two categories of 529 plans -- (i) prepaid tuition plans and (ii) college savings plans.

A prepaid tuition plan allows you to save and invest funds to prepay tuition only at a qualified educational institution at today’s tuition rates.  A college savings plan on the other hand, allows you to use the invested funds for books, supplies, equipment, room and board as well as tuition.  The amount of contributions that may be made and the permitted use of funds may vary depending on the specific 529 plan.  For information concerning 529 plans we suggest you visit the College Savings Center on FINRA’s website at (http://apps.finra.org/investor_Information/Smart/529/000100.asp) and consult with your financial advisor.

Your 529 plan investment grows tax-deferred and distributions to pay for the beneficiary’s college costs are free from federal tax. You should also consider the following in connection with state tax treatment of investments in 529 college savings plans:

• Depending upon the laws of the home state of the investor or designated beneficiary, favorable state tax treatment or other benefits offered by such home state for investing in 529 college savings plans may be available only if you invest in the home state’s 529 college savings plan.
  
• Any state – based benefit offered with respect to a particular 529 college savings plan should be one of many appropriately weighted factors to be considered in making an investment decision.
• You should consult with your financial, tax, or other adviser to learn more about how state – based benefits (including any limitations) would apply to your specific circumstances. You also may wish to contact your home state or any other state’s 529 college savings plan to learn more about the features, benefits, and limitations of that state’s 529 college savings plan.

Generally, you are provided with a choice of mutual funds or variable products in which to invest your contributions.  Any accumulated earnings are non-taxable. Additionally, most states offer tax deductions to in-state residents who make contributions to the state- sponsored 529 plans of their home state. For tax advice regarding 529 plans, please consult with your tax professional.

AIGFA’s Revenue Sharing Disclosure for 529 Plans

There are hundreds, if not thousands of companies, nationwide offering 529 plans.  We have made arrangements with eight of the largest and well known of these companies and allow them increased access to our financial advisors to provide them with training and other educational information and product information regarding their 529 plans so that our financial advisors can serve investors better.  
           
The nine sponsors that currently participate in these agreements, which include provisions for revenue sharing are: AIG SunAmerica Mutual Funds, Allianz Global Investors, American Funds, Columbia Management, John Hancock Funds, MFS Distributors, Pacific Life, Oppenheimer and Putnam Investments.
           
In addition to the customary sales charges in connection with sales of 529 plans, the sponsors make payments to AIGFA.  First AIGFA receives a Gross Sales Payment of up to .125 percent (12.5 basis points).  Therefore, if, for example, an investor purchases a 529 plan and makes an initial deposit of $10,000, AIGFA would receive up to $12.50. In addition, AIGFA will receive an additional payment, paid quarterly, of up to .10 percent (10 basis points) per year of the amount held (the “Assets Under Management Payment”). For example, on a $10,000 holding, AIGFA would be paid up to $10.  These payments are made by the sponsors' distributor, investment advisers or other related entities. Sponsors and/or their affiliates make aggregate payments based on the formula set forth above.

How AIGFA and Your Financial advisor are Compensated When you Buy a 529 Plan
           
AIGFA and your financial advisor are paid in different ways for helping you choose a 529 plan. 

• AIGFA is paid by the fund family or distributor based on the fees you pay.  Then, a portion of that payment goes to your financial advisor.
• The compensation formula to determine the amount of payment for your financial advisor is the same regardless of which 529 plan you purchase.
• In addition, ongoing payments (known as residuals or trails) on mutual funds and variable annuities that are held in your account are paid to AIGFA.  AIGFA then pays your financial advisor based on its compensation formula.
• AIGFA financial advisors do not receive a greater or lesser commission in connection with sales of 529 plans by the sponsors as distinct from other 529 plan issuers. 

You should feel free to ask your financial advisor how he or she will be compensated for any transaction involving a 529 plan and how that compensation may compare with another transaction involving a 529 plan.

Direct Participation Programs and Real Estate Investment Trust Programs

Direct Participation Program (DPP) Investing

A DPP is a program that generally takes the form of a partnership.  As an investor in a DPP, the investor takes the role of a limited partner whereby he or she invests a specific amount of money.  Unlike a corporation where profits are taxed at the corporate level prior to distribution to investors and then again at the individual level, the investor’s share of profits earned through the limited partnership is taxed only at the individual level.  Though this structure, DPPs allow investors to participate directly in the cash flow and tax benefits of the partnership.  DPPs generally involve ventures, such as real estate, oil and gas drilling, and equipment leasing. Such investments are long term and lack liquidity.

Real Estate Investment Trust (REIT) Investing

A real estate investment trust, or “REIT,” is a company that owns, and in most cases, operates real estate such as apartments, shopping centers, offices, hotels and warehouses.  Some REITs also engage in financing real estate.   While some REITs are listed and trade on the New York Stock Exchange, the American Stock Exchange or NASDAQ, many others are not listed on an exchange and are referred to as non-public REITS. Such investments are long-term investments and generally lack liquidity.

 AIGFA’s Revenue Sharing Disclosure for DPPs and REITs

 For the same reasons as cited above for mutual funds and variable annuities, AIGFA enters into revenue sharing arrangements with certain DPP and REIT sponsors.  Again, these sponsors have greater access to our financial advisors to provide educational and training opportunities. Sponsors that participate in these revenue sharing arrangements include the following companies: Behringer Harvard, KBS, Cole Capital, Hines, Dividend Capital, Inland Investments, Kensington Investment Group, Ridgewood, and Wells Family of Real Estate Funds.

In addition to the customary sales charges in connection with sales of DPPs and REITs, the sponsors make payments to AIGFA to participate in the program.  AIGFA receives a Gross Sales Payment of up to 2 percent of the transaction amount.  If, for example, an investor makes a deposit of $10,000, AIGFA would receive up to $200.

How AIGFA and Your Financial Advisor are Compensated When You Buy DPPs and REITs

 AIGFA and your financial advisor are paid in different ways for helping you choose DPPs and REITs, depending on the type of investment and the amount invested. 

• AIGFA is paid by the DPP or REIT sponsor based on the fees you pay.  Then, a portion of that payment goes to your financial advisor. 
• The compensation formula to determine the amount of payment for your financial advisor is the same regardless of which DPP or REIT you purchase.   
• AIGFA financial advisors do not receive a greater or lesser commission in connection with sales of DPP or REIT contracts by the sponsors as distinct from other DPP or REIT provider. 

You should feel free to ask your financial advisor how he or she will be compensated for any DPP or REIT transaction and how that compensation may compare with another DPP or REIT transaction.

Third party money managers

In addition to the revenue sharing arrangements stated above, AIGFA also enters into
revenue sharing arrangements with certain third party money managers (“managers”). Our financial advisors may assist you in engaging such managers to manage your account, including, but not limited to, asset rebalancing, performance reporting, and billing. A manager is engaged only with your prior consent and subject to a separate agreement between you and the manager.

Managers that participate in revenue sharing arrangements are provided greater access to our financial advisors to provide training and other educational presentations and product information so that they can serve investors better.

You are charged ordinary management fees by the manager (and negotiated between you and the manager) in connection with managing your account. AIGFA may receive up to 0.20 percent (20 basis points) per year of the assets under management or up to 20 percent of management fees earned on behalf of financial advisors of AIGFA For example, if you hold $10,000 in your account that is serviced by a third party money manager, AIGFA would receive up to $20 per year. AIGFA may also receive up to 5 basis points on gross sales placed with a manager. In addition, AIGFA may receive a flat fee of up to $100,000.

Set forth below is a listing of third party money managers from whom we receive revenue sharing payments:

American Financial Management Ltd.
AssetMark Investment Services Inc.
Barclays Global Investors
Bell Capital Management Inc.
Brinker Capital Inc.
Clark Capital Management Group Inc.
CLS Investment Firm, LLC.
Curian Capital, LLC.
Fairlane Investment Advisors Inc.
Flexible Plan Investments Ltd.
Genworth Financial Asset Management, Inc.
Hanlon Investment Management, Inc.
ICON Advisers, Inc.
Lockwood Advisors Inc. & Lockwood Capital Management Inc.
Meeder Advisory Services, Inc. & Meeder Asset Management, Inc.
Portfolio Management Consultants
Portfolio Strategies Inc.
Proactive Money Management Inc.
Prudential Investments LLC
Rochdale Investment Management LLC.
Russell Funds Distributors, Inc.
SEI Investments Management Corp.

Importantly, the compensation formula to determine the amount of payment for your
financial advisor is the same regardless of whether a third party money manager is used.  AIGFA financial advisors do not receive a greater or lesser commission in connection with sales of certain products when a third party money manager is used.

EXPENSE REIMBURSEMENTS

AIGFA and your financial advisor may be reimbursed by sponsors of mutual funds, variable annuities, variable universal life, third party money management platforms, REITS, and DPPs for expenses incurred for various promotional activities including but not limited to sales meetings, conferences and seminars held in the ordinary course of business.

Although product sponsors make an independent determination of what they will spend on such items, some sponsors may allocate their promotional budgets based on prior sales and asset levels.

The information in this disclosure document is as of April 30, 2008. 

¹12b-1 fees are payments made by a mutual fund in connection with a distribution of its securities.  The fund company takes 12b-1 fees out of the fund’s assets each year for marketing and distribution expenses, which may include compensating financial advisors.

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