Morningstar Launches Tools to Ensure Breakpoint Discounts

Fund-tracking firm Morningstar of Chicago announced Monday the launch of a set of Internet-based applications to help advisers at brokerage firms comply with federal regulations requiring them to inform clients of discounts on mutual fund breakpoints.

The new products, known collectively as Advisor Compliance Tools, are also designed to help investors understand and receive the breakpoint discounts they might qualify for.

One particular service, Compliance Data DigestSM, centralizes information for the roughly 240 fund families providing load funds. The data, which includes, among other things, rights of accumulation and letters of intent, is expected to help advisers figure out if their clients meet the criteria for breakpoint discounts on front-end sales loads.

Also this year, Morningstar will introduce another application, Breakpoints AnalyzerSM, which will prepare reports explaining factors affecting sales charges investors pay.

In early 2003, the NASD issued an alert expressing concern that investors may not have received breakpoint discounts to which they were entitled. Morningstar did not disclose how much it will charge for the new service.