Sales charge


Also found in: Dictionary, Thesaurus, Medical, Legal, Acronyms, Encyclopedia.
Related to Sales charge: deferred sales charge, Contingent deferred sales charge

Sales charge

The fee charged by a mutual fund at purchase of shares, usually payable as a commission to a marketing agent, such as a financial adviser, who is thus compensated for assistance to a purchaser. It represents the difference, if any, between the share purchase price and the share net asset value.

Load

A sales charge or commission one pays for purchasing a mutual fund. The charge is paid to the person(s) who sold the investor shares in the fund. There are three types of load. A front-end load occurs when the shareholder pays the fee when buying into the fund. A back-end load means that the investor pays when selling his/her shares. Finally, an investor with a level-load fund pays periodically throughout his/her time as a shareholder. Studies have shown that load funds perform neither better nor worse than no-load funds.

Sales charge.

A sales charge is the fee you pay to buy shares of a load mutual fund or other investment purchased through a financial professional.

The charge is typically figured as a percentage of the amount you invest. As the size of your investment increases, the rate at which you pay the sales charge may decrease.

Each dollar amount at which there is a corresponding reduction in the charge is known as a breakpoint. For example, the rate may drop from 4.5% to 4.25% with an investment of $25,000.

The sales charge on a mutual fund may be imposed as a front-end load when you buy (also known as Class A shares), as a back-end load when you sell (also known as Class B shares), or as a level load each year you own the fund (also known as Class C shares).

References in periodicals archive ?
Merrill Lynch's procedures lacked substantive guidelines, instructions, policies or steps for brokers or their supervisors to follow to determine if a customer's UIT purchase qualified for and received a sales charge discount.
When investors are eligible for a discount or sales charge waiver, securities firms must provide them, without exception," said Mary L.
Withdrawal of tax-deferred accumulations may be subject to deferred sales charges and are subject to ordinary income tax.
Average annualized total returns include changes in share value, reinvestment of distributions, and the effect of the maximum sales charge of 2.
Had the sales charge been reflected, returns would have been lower.
Performance data used for the rankings does not account for any up-front sales charges or contingent deferred sales charges.
Namely, FEP 2001-1 receives, from a predetermined set of shareholders in the mutual funds, the asset-based sales charges (12b-1 fees), contingent deferred sales charges (CDSC fees), and shareholder servicing fees (SSF) which are charged to these shareholders.
The notes are collateralized by HMFFT 2004-1's participation rights to receive certain asset-based sales charges (ABSC or 12b-1 fees), contingent deferred sales charges (CDSC), and shareholder servicing fees (SSF) for the distribution and servicing of class B mutual fund shares sold to investors.
The notes are collateralized by HMFFT 2003-1's participation rights to receive certain asset based sales charges (ABSC or 12b-1 fees), contingent deferred sales charges (CDSC), and shareholder servicing fees (SSF) for the distribution and servicing of class B mutual fund shares sold to investors.
The notes are collateralized by HMFFT 2003-3's participation rights to receive certain asset based sales charges (ABSC or 12b-1 fees), contingent deferred sales charges (CDSC), and shareholder servicing fees (SSF) for the distribution and servicing of class B mutual fund shares sold to investors.
Namely, FEP 2002-2 receives, from a predetermined set of shareholders in the mutual funds, the asset-based sales charges (12b-1 fees), contingent deferred sales charges (CDSC fees), and shareholder servicing fees (SSF) which are charged to these shareholders.
The notes, in turn, are collateralized by HMFFT 2003-2's participation rights to receive certain asset based sales charges (ABSC or 12b-1 fees), contingent deferred sales charges (CDSC), and shareholder servicing fees (SSF) for the distribution and servicing of class B mutual fund shares sold to investors.