Task Force Recommendations for New Confirmation Content

The Joint NASD/Industry Task Force recommended two changes to mutual fund confirmations that are intended to help investors determine whether they received all the breakpoints discounts to which they were entitled on each mutual fund transaction. To implement these recommendations, industry working groups were charged with developing specific textual language and numerical representations to include on confirmation statements. The working groups have completed their tasks and urge the financial industry to implement these recommendations as soon as reasonably practicable, but no later than the industry-set goal for full compliance of November 1, 2004.

 

Inclusion of Sale Charge
The Task Force recommended that mutual fund confirmations should reflect the entire sales load charged to each front-end load mutual fund purchase transaction. See Report of the Joint NASD/Industry Task Force on Breakpoints, pp. 10, (Recommendation D). To assist the financial industry in implementing this recommendation, on August 23, 2004, NSCC made changes to their mutual fund trade confirmation records to include sales charge information on front end load funds. These enhancements will allow funds to display the sales charge rate on investor confirmations for all purchases and exchanges of front-end load funds. Fund companies have begun to supply sales charge rate information through NSCC. Fund companies and broker/dealers should now be working to achieve the industry-set goal of November 1, 2004 for including the sales charge, shown in percentage format, on all trade confirmations for front-end load mutual fund purchases -- even if it is zero. This information will enable investors to verify that the proper charge was applied.

 

Confirmation Legend
The Task Force also recommended that confirmations for mutual fund transactions should be amended to contain a statement that alerts investors to the availability of breakpoint discounts and directs them to the appropriate materials for determining their own eligibility for breakpoint discounts. See Report of the Joint NASD/Industry Task Force on Breakpoints, pp. 14 (Recommendation H). The industry working group encourages the financial industry to include the following language on such confirmations as soon as is reasonably practicable, but no later than the industry-set goal of November 1, 2004.

 

Proposed Legend:
You may be eligible for breakpoint discounts based on the size of your purchase, current holdings or future purchases. The sales charge you paid may differ slightly from the Prospectus disclosed rate due to rounding calculations. Please refer to the Prospectus, Statement of Additional Information or contact your financial advisor for further information.