A 5466
P&S 5036
August 16, 2002 

TO: ALL PARTICIPANTS

ATTENTION: MANAGER MUTUAL FUNDS OPERATIONS, MANAGER DATA PROCESSING, MANAGER CASHIERS, MANAGER P&S DEPARTMENT

SUBJECT: MUTUAL FUND COMMISSION SETTLEMENT ENHANCEMENTS

On November 18, 2002, National Securities Clearing Corporation (NSCC) will be modifying the Mutual Fund Commission Settlement service to handle several additional business scenarios.

I. In order to accommodate additional fee types, the following new Commission Type codes will be added to the Commission Settlement Header Record (Record Type 30).

1. Code 13 - Service Fee. Shareholder Service Fees provide for the maintenance and service of shareholder accounts. These services may include administering shareholder accounts, entering shareholder transactions, maintaining "master accounts" and answering shareholder inquiries.

2. Code 14 - Record keeping Fee. In an omnibus account environment, an intermediary has a single account listed on the fund books. This fee is paid to the intermediary responsible for accepting trades, generating account statements, maintaining shareholder records, and performing other shareholder-level tasks.

3. Code 15 - Advisor Paid Fee. This is similar to a 12b-1 fee except that is paid from Advisory revenue and not from fund expenses.

II. To better identify the type of account from which the commission is being paid, the Fund/SERV Social Code field will be added to the Commission Settlement Detail Record (Record Type 31).

III. To better identify the type of trade that has generated the commission, the Initial/Subsequent Trade Indicator will be renamed Transaction Type on the Commission Settlement Detail Record, (Record Type 31) Sequence Record 2. The following two (2) new values will be added.

1. Value ‘3’ = Wrap Purchase

2. Value ‘4’ = 529 Purchase

All changes are optional for funds sending data into the Mutual Fund Commission Settlement system. Firms that are the recipients of this data must be prepared to accept the new values.

The revised file layouts will be posted to the NSCC web site, formats.nscc.com very shortly for participants to review. Participants are encouraged to test the layout changes prior to the implementation date of November 18, 2002. Beginning October 14, 2002, testing of the new record layouts will be provided in the Participant Services Environment (PSE) region.

Participants wishing to test must contact the Enterprise Service Center Participant Test Group (PTG) at (212) 855- 5630. To ensure proper set up for the PSE region, a request must be received by PTG at least three days prior to the date you wish to initiate testing.

Any questions or concerns regarding this Important Notice can be directed to the Mutual Fund Marketing (212-855-8877) or the undersigned at 212-855-5674.

Randy Solomon
Director
Mutual Funds Marketing