Another area in which regulators expect the Web
to play a major role is in the delivery of
breakpoints.
Breakpoints are discounts that investors may qualify for if they make a
substantial investment in a specific mutual fund or variety of funds
within a single mutual fund family. Funds aren't obligated to offer breakpoint
discounts, and those that do calculate their discounts differently.
However, if a fund offers breakpoints, it's obligated to disclose how it
calculates the discount.
The complexity of many companies' breakpoint rules meant that, in the
past, investors often failed to receive the discounts they were entitled
to. Recently, the mutual fund industry has taken a number of steps to
help ensure investors get their breakpoints, including changes in the
way fund transactions are processed, better recordkeeping, training
progra ms for the professionals who sell funds, investor education about
breakpoints, and improved disclosure.
In addition, the Financial Industry Regulatory Authority (FINRA) provides a Breakpoint Search Tool to help investors and their brokers find out what breakpoints they're eligible for with particular funds. The Breakpoint Search Tool is available free of charge at http://tools1.finra.org/nbst. A tutorial about how to use all the tool's features is also available.
Getting your break Every company's breakpoint policy is different. For instance, some
funds combine the amounts of your current and previous purchases to
calculate whether you qualify for a discount. And while some funds
calculate eligibility based on an individual's personal holdings, others
base it on a household's combined investments. You may even be
able to include your parents', grandparents', or children's investments
— even if they live at separate addresses.
If you think you own enough shares in a fund to be eligible for a
breakpoint that you haven't been credited with, get in touch with your
financial adviser or your mutual fund company.
