load fund

Load Fund

A mutual fund with shares sold at a price including a large sales charge. This sales fee may range from 3% to as high as 8% of the full purchase.

Notes:

In exchange for paying your fees up front, mutual fund companies don't usually make you pay high administration fees.

See also: Back End Load, Contingent Deferred Sales Charge - CDSC, Exchange Privilege, Front End Load, Mutual Fund, No-Load Fund

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Load fund

A mutual fund that sells shares with a sales charge-typically 4% to 8% of the net amount indicated. Some no-load funds also levy distribution fees permitted by Article 12b-1 of the Investment Company Act; these are typically 0. 25%. A true no-load fund has neither a sales charge nor a distribution fee.

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load fund

A mutual fund with shares sold at a price that includes a sales chargetypically 4 to 9.3% of the net amount invested. Thus, load funds are sold at a price exceeding net asset value, but they are redeemed at net asset value. There is no reason to expect an investment company with a sales charge to outperform one without a sales charge. See also load, low-load fund, no-load fund.

Case Study Mutual fund distributors sometimes offer two, three, or four classes of shares for the same fund. Fund classes differ with regard to the fees charged to investors who purchase and own the shares. Class A shares typically entail a sales charge that ranges between 3% and 6%, while class B shares for the same fund entail a higher annual fee plus a redemption charge, or exit fee, in place of an initial sales charge. The redemption fee generally declines the longer shares are held before being redeemed. A third class of mutual fund shares may have no sales or redemption charge, but entail a higher annual fee. One major brokerage firm offers an aggressive growth fund with the following charges:

Class	A	B	C
Initial Sales Charge	Up to 5.00%, reduced for large purchases; no charge for purchases over $1 million	None	1.00%
Deferred Sales Charge	1.00% on purchases over $1 million or more if redeemed within one year of purchase	Up to 5.00% with reduction over time; no deferred charge after six years	1.00% if redeemed within one year
Annual Distribution Fee	0.25% of average daily assets	1.00% of average daily assets	1.00% of average daily assets

Individuals who invest a substantial amount of money and expect a long holding period are generally better off choosing class A shares because the lower annual expenses will, over time, more than offset the initial sales charge. In addition, investors who purchase a substantial number of shares often qualify for a reduced sales charge. In summer 2001 one major brokerage firm instructed its brokers to limit sales of class B shares to clients who invested $100,000 or less.