exchange privilege

Exchange Privilege

The opportunity given to a mutual-fund shareholder to exchange a fund for another within the same fund family at no additional cost.

Notes:

This privilege allows investors to switch funds when market conditions change. For example, you might want to be in an aggressive growth fund when the market is going up, but when the markets start heading downward, you may switch to a bond fund.

There is usually a limit as to how many times per year you can switch to other funds within a family.

See also: Growth Fund, Load Fund, Mutual Fund, Switching

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Exchange privilege

A mutual fund shareholder's right to switch from one fund to another within one fund family, usually at no additional charge.

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exchange privilege

The right to exchange shares in one mutual fund for shares in another fund managed by the same firm. The rate at which shares are exchanged is determined by differences in relative values. There is usually a nominal charge for each transfer. This privilege is designed to allow investors to move their money among funds without incurring additional sales fees as their investment goals change. Also called conversion privilege.