Investor Alert

Class B Mutual Fund Shares: Do They Make the Grade?

Buying mutual funds through a broker or other investment professional usually means choosing among different mutual fund classes. The only differences among these classes is how much you will pay in expenses and how much your broker will be paid for selling you the fund.

NASD is issuing this Alert because we are concerned that investors may purchase Class B mutual fund shares when it would have been more cost-effective for those investors to purchase a different class of shares.

Before purchasing Class B mutual fund shares, you should determine whether this investment is in your interest, and not just in the interest of your broker or adviser who may receive higher commissions from the sale of Class B shares than other classes of fund shares.

Investor Reminder

Handling Spam

Stock spams - unsolicited e-mails sent to a large number of address - are the electronic equivalent of a boiler room sales operation in which someone who doesn't know you tries to sell you securities.

While NASD does not prohibit its member brokerage firms or their employees from sending out spam, it does regulate the content of such messages sent to the public.

You can forward spam to NASD recommending that you invest in a stock or other investment.

Also, read our Investor Alert - Stocks Spams and Scams - to learn more about spam and some of the most common types of e-mail stock frauds.

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NASD Investor Complaint Center

If you believe you have been the subject of unfair or improper business conduct by a brokerage firm or broker, you may file an investor complaint with NASD online at our newly revised Investor Complaint Center.

Tips and cooperation from investors are a valuable source of information for us in our investigations and NASD and other regulatory agencies are far more effective with your help. Together, we can ensure that America's securities markets remain the most ethical and respected in the world.

View our Investor Complaint Program brochure to learn about how we'll handle your complaint and other actions you may want to take to recover money or securities.

News Dispatch

Your Brokerage Account Records: Look for New Reports

Under newly effective amendments to the SEC's Books and Records Rules, brokers are required to create and furnish to certain customers, account records with basic identification and background information, as well as definitions of the investment objectives in an account. This new requirement is to help ensure that both you and your broker have a common understanding of your investment objectives and to assist securities regulators in determining whether certain broker recommendations were "suitable" and in line with the account's investment objectives. Not all customers will receive this information. Corporate accounts, inactive accounts, and accounts that do not require suitability determinations are exempt from this requirement.

For all accounts opened after May 2, 2003, brokers who make investment recommendations must provide investors with a copy of their account record within 30 days of opening the account, at least every 36 months thereafter, and whenever certain investor information, including investment objectives, changes. If you had an existing account with your broker on May 2, 2003, you should expect to receive this information within the next 36 months.

Furnishing this information to you will enable you to review, verify, and correct any inaccurate information to assist your broker in meeting his or her obligations to evaluate the suitability of investment recommendations.

To learn more, see NASD's Books and Records Web page.

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