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Progress Made on Implementation of Breakpoint Taskforce Recommendations

Washington, DC, April 5, 2004 - The NASD recently published a status report of the progress that has been made towards implementing the Joint NASD/Industry Task Force to address errors in providing breakpoint discounts to investors in connection with the purchase of mutual fund shares.

Background
In July 2003, the Task Force on breakpoints issued a report setting forth 13 recommendations to address errors and failures in providing breakpoint discounts to investors. The report called for voluntary implementation of the recommendations, and encouraged the SEC and self-regulatory organizations to monitor implementation efforts.

According to the status report, “the financial industry has taken the steps necessary to fully implement seven of the Task Force’s thirteen recommendations,” including:

  • mutual fund prospectus and website disclosure;
  • standardized checklists or order verifications;
  • record of linkage information;
  • prospectus disclosure regarding the customer’s role in assisting a broker-dealer in securing breakpoint discounts;
  • written disclosure statement;
  • registered representative training; and
  • investor education.

The status report discusses how each of these recommendations was implemented and, where appropriate, provides a website address where more detailed information may be found regarding the implementation.

ICI Position
The Investment Company Institute strongly supports efforts to ensure that the nation's mutual fund shareholders receive the appropriate discounts on eligible purchases through intermediaries of mutual fund shares with front-end sales loads. The Institute is a member of the task force established by the NASD to recommend measures to ensure that mutual fund investors are charged the correct sales charges on mutual fund transactions.

Related Links
The Institute also offers a free online guide to help investors ensure that they receive the proper discounts when they purchase mutual funds.