1. American Century Brokerage
Breakpoint Continuing Education
May 2011
COMPANY CONFIDENTIAL. FOR INTERNAL USE ONLY. © 2004 American Century Services Corporation. All rights reserved.

2. Agenda General Breakpoint Information
Fundamentals of Breakpoint Eligibility
Firm Specific Topics
Code COMPANY CONFIDENTIAL. FOR INTERNAL USE ONLY. © 2004 American Century Services Corporation. All rights reserved.

3. General Breakpoint Information
Mutual fund breakpoint definition
What are breakpoints? Many mutual funds that are sold with sales charges, or loads, offer discounts to investors who invest certain amounts of money. These discounts are available only among funds that are sold with sales charges and do not apply to no load funds, which are sold without sales charges. The amount of the discount varies depending upon the amount of the investment. The investment amounts at which investors qualify for the discounts are called breakpoints. The higher the level of your investment, the more likely you are to qualify for a breakpoint discount.
Code COMPANY CONFIDENTIAL. FOR INTERNAL USE ONLY. © 2004 American Century Services Corporation. All rights reserved.

4. General Breakpoint Information
Location of breakpoint-related information
Breakpoint information can be found in the following locations:
Prospectus -Check the fee table in the mutual fund’s prospectus to find out the precise amount of the mutual fund’s fees and expenses.
Statement of Additional Information (SAI)
FINRA website- Breakpoint Search tool
Access FINRA “BreakPoint” tool button on mutual fund trading page.
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5. General Breakpoint Information
How can I determine if my mutual fund provides breakpoints?
Mutual funds that offer breakpoints generally include a schedule in the prospectus that shows the dollar amounts at which the discounts are offered. The law requires that every mutual fund investor must receive a mutual fund prospectus no later than at the time he or she receives confirmation of a purchase. You can also request a prospectus through the fund company or American Century Brokerage. Many fund companies offer downloadable versions of the prospectus on their websites.
Code COMPANY CONFIDENTIAL. FOR INTERNAL USE ONLY. © 2004 American Century Services Corporation. All rights reserved.

6. General Breakpoint Information
Breakpoint rules vary across mutual fund families
How are breakpoints determined? Breakpoints can vary from one fund family to another. Because fund companies have their own formulas for determining breakpoints, it is important that clients inform themselves about the investment levels at which breakpoints are offered.
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7. General Breakpoint Information
Impact of breakpoint eligibility on share class selection
Class A Shares: Class A shares typically charge a front-end sales charge. When you buy Class A shares with a front-end sales charge, a portion of the dollars you pay is not invested.
Class A shares may impose an asset-based sales charge (12b-1 fees), but it generally is lower than the asset-based sales charge imposed by the other classes.
Code COMPANY CONFIDENTIAL. FOR INTERNAL USE ONLY. © 2004 American Century Services Corporation. All rights reserved.

8. General Breakpoint Information
Impact of breakpoint eligibility on share class selection
Class B Shares: Class B shares typically do not charge a front-end sales charge, but they do impose asset- based sales charges that may be higher than those that you would incur if you purchased Class A shares. Class B shares also normally impose a contingent deferred sales charge (CDSC), which you pay when you sell your shares. For this reason, these should not be referred to as "no-load" shares. The CDSC normally declines and eventually is eliminated the longer you hold your shares. Once the CDSC is eliminated, Class B shares often then "convert" into Class A shares. When they convert, they will begin to charge the same asset-based sales charge as the Class A shares.
Class B shares do not impose a sales charge at the time of purchase. Unlike Class A purchases, all of your dollars would be immediately invested. But your expenses, as measured by the expense ratio, may be higher. You also may pay a sales charge when you sell your Class B shares.
Code COMPANY CONFIDENTIAL. FOR INTERNAL USE ONLY. © 2004 American Century Services Corporation. All rights reserved.

9. General Breakpoint Information
Impact of breakpoint eligibility on share class selection
Class C Shares: Class C shares usually do not impose a front-end sales charge on the purchase, so the full dollar amount that you pay is immediately invested. Often Class C shares impose a small charge if you sell your shares within a short time of purchase, usually one year. Class C shares typically impose higher asset-based sales charges than Class A shares, and since their shares generally do not convert into Class A shares, their asset-based sales charge will not be reduced over time. Class C shares are often used for asset-allocation purposes.
  Class C shares do not impose a sales charge at the time of purchase, but they may impose other redemption fees. Additionally, in most cases your expense ratio could be higher than Class A shares and Class B shares.
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10. Rights of Accumulation
What is Rights of Accumulation (ROA)?
Rights of Accumulation— Many mutual funds allow investors to include the value of
previous purchases of the same fund, or another fund within the same fund family, with the value of the current purchase to qualify for breakpoint discounts. Moreover, mutual funds may allow investors to include existing holdings in multiple accounts, such as individual retirement accounts (IRAs) or accounts at other financial organizations, to qualify for breakpoint discounts. Therefore, if you have accounts at other financial organizations and wish to take advantage of the balances in these accounts to qualify for a breakpoint discount, you must advise American Century Brokerage about those accounts. You may need to provide documentation if you wish to rely upon balances in accounts at another firm.
In addition, many mutual funds allow investors to include the value of holdings in accounts of certain related parties, such as spouses or children, to qualify for breakpoint discounts. Each mutual fund has different rules that govern when relatives may rely upon each other’s holdings to qualify for breakpoint discounts.
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11. Fundamentals of Breakpoint Eligibility
Rights of Accumulation (ROA)Procedures?
Pershing determines the rights of accumulation (ROA) for Class A mutual fund purchases by aggregating assets within the same mutual fund family at the individual account level and the aggregation of Class A mutual fund assets within the same fund family held in all Pershing accounts bearing the same Social Security Number and the linked Social Security Number listed on the Relationship link within the Profile tab of NetX360.
Here's how an ROA works: You have $52,000 invested in the ABC Growth Fund, which is sold with a 5.75 percent front-end sales load. You plan to invest an additional $50,000 in the ABC International Fund. Using the ROA privilege, your new $50,000 investment can be combined with your existing ABC Growth Fund account balance to total $102,000. As a result, you will pay the lower sales charge of 3.75 percent applicable to purchases of at least $100,000 on your new $52,000 investment. .
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12. Fundamentals of Breakpoint Eligibility
Elements of Rights of Accumulation (ROA)
1.Existing customer holdings
Same fund family, same account
Same fund family at other broker/dealer
Same fund family in multiple accounts, such as individual retirement accounts (IRAs) at broker/dealer or elsewhere
2. Other eligible account holders
Same fund family in any eligible account at broker/dealer or elsewhere
3. Purchases made the same day at broker/dealer or elsewhere
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13. Fundamentals of Breakpoint Eligibility
What is a Letter of Intent (LOI)? A letter of intent allows investors to qualify for a breakpoint discount without immediately investing the dollar amount at which the discount is offered. For example, by signing a letter of intent, an individual investor who intends to invest an amount greater than a load fund's breakpoint (such as $50,000) within a designated period (such as 13 months) would be allowed to receive the breakpoint discount on the sales charge as if the investment had been made in a single lump sum. However, if an investor fails to invest the amount required by the LOI, the fund is entitled to retroactively deduct the correct sales charges based upon the amount that the investor actually invested.
Here's how an LOI works: The XYZ Family equity funds are sold with a 5.75 percent front-end sales load. That sales charge declines to 3.75 percent for purchases in excess of $100,000. You open an account in the XYZ Growth Fund with a $10,000 investment and sign a letter of intent indicating that you intend to purchase a total of $100,000 worth of shares in one or more of the XYZ Family equity funds within the next 13 months. Consequently, you will receive a breakpoint discount on your purchase and pay a sales charge of 3.75 percent.
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14. Fundamentals of Breakpoint Eligibility
Types of Letters of Intent (LOI)
Existing Letter of Intent
2. New Letter of Intent
Based on plans to purchase over next 13 months
Retroactive LOI based on previous, current, and possibly future purchases
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15. Firm-specific topics
AWD Breakpoint Worksheet- You must complete the AWD Breakpoint Worksheet when placing a Class A fund trade to determine if the client will be eligible to receive a breakpoint.
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16. Firm-specific topics Relationship Link on NetX360 x
Use to store account linkage information so that the right breakpoint discount is applied to current and future purchases. x
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17. Questions ?
As you can see, understanding the availability of breakpoint discounts is important because it may allow you to purchase Class A shares at a lower price. The availability of breakpoint discounts may save you money and may also affect your decision regarding the appropriate share class in which to invest. Therefore, you should discuss the availability of breakpoint discounts with your investment professional and carefully review the mutual fund prospectus and its statement of additional information when choosing among the share classes offered by a mutual fund. If you wish to learn more about mutual fund share classes or mutual fund breakpoints, you can also review the investor alerts via the FINRA website:
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