Summary statistics for front-end loads
appear in Panel B of Table 2.
One class might, for instance, involve a front-end load
but no 12b-1 fee.
Mutual funds that sell shares charging front-end loads
usually offer discounts at certain pre-determined levels of investment, which are called breakpoints.
Today, an investor who buys a load fund has to decide among front-end load
funds, back-end load funds, funds with 12b-1 fees, funds with 12b-1 fees and declining redemption fees and so forth.
In the United Kingdom, mutual funds organized as corporations charge significantly lower front-end loads
than mutual funds not organized as corporations, after controlling for other factors.
The Task Force conducted an in-depth review of the financial industry's interaction with mutual fund customers, including processing of mutual fund share purchases with front-end loads
, to fully understand why investors who purchased Class A shares of mutual funds did not always receive every available breakpoint discount.
During 2003 through May 2004, most mutual fund sales at Banorte Securities were in Class B shares, despite the fact that the low front-end loads
available to the firm's customers meant that an investment in Class A shares generally yielded a higher return than a similar investment in the Class B shares.
With the implementation of Class C and D shares, Merrill Lynch now offers two classes with front-end loads
and two types of contingent back-end, or deferred loads.
Fund shares are offered free of front-end loads
and deferred sales charges.
A growing number of smaller, retail investors want to avoid front-end loads
, and many larger clients want the lower fees offered to institutional investors but do not have a large enough asset base to qualify for a privately-managed account," she said.
Barnett also made substantial improvements to its Emerald mutual fund family, introducing a small capitalization fund and a "B" shares option which eliminates front-end loads
, but features an exit fee that declines over time.
The self-assessment required firms that sold front-end load
mutual funds to review their compliance in providing breakpoint discounts to customers during 2001 and 2002 and report those results to FINRA.