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.

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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).