Mutual funds should provide investors with better information about fee discounts, an U.S. industry task force recommended on Tuesday after regulators discovered shareholders were being shortchanged.

A report on fund breakpoint discounts released by the National Association of Securities Dealers also recommended regulatory changes and detailed record keeping by brokerages to help investors get the discounts they are entitled to.

Breakpoints are thresholds at which purchases are large enough to qualify for a fee discount. Discounts are offered to investors in front-loaded funds and customarily kick in at the US$50,000, US$100,000, US$250,000, US$500,000 and US$1 million levels.

The recommendations were proposed by an NASD-led task force whose members included the New York Stock Exchange, fund companies and securities firms.

The Securities and Exchange Commission demanded the task force earlier this year, after routine examinations by NASD found that a significant percentage of investors were not receiving the correct discounts. The average discount denied was $364 per transaction.

The report found that most problems did not appear to be intentional, but were most often the result of a failure by brokerages to link a customer’s ownership of different funds in the same fund family.

The fund industry has already begun to address the situation and plans to report back to the NASD and the SEC the task force said.

“Getting breakpoint discounts right is an important investor protection issue,” said Robert Glauber, chairman and CEO of NASD. “Working with the SEC, NYSE and the securities and mutual fund industries, NASD is committed to both helping investors receive refunds for missed breakpoints, and ensuring investors receive the appropriate discount when purchasing mutual funds.”

A copy of the Task Force report can be found at: http://www.nasdr.com/breakpoints_report.asp.