contingent deferred sales charge

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Contingent deferred sales charge (CDSC)

The formal name for the load of a back-end load fund.

Contingent Deferred Sales Charge

The formal name for the load in a back-end load fund. A CDSC is the fee paid when a shareholder sells shares in a mutual fund within a certain number of years. That is, when an investor initially buys a share in a back-end load fund, he/she agrees to pay a third party, usually a financial institution or broker, a certain percentage of the share's value if he/she decides to sell it within five to 10 years, depending on the specific nature of the agreement. The CDSC usually declines by the year until the maximum number of years is reached. See also: B-share.

contingent deferred sales charge

A mutual fund redemption fee that is reduced or eliminated for specified holding periods. For example, a fund might charge a 6% redemption fee for a holding period of less than one year, a 5% fee for a holding period of one to two years, and so forth. Mutual funds with a contingent deferred sales charge also generally levy an annual 12b-1 fee.
References in periodicals archive ?
Within these fees can be 12b-1 fees--charged annually for a fund’s marketing and distribution costs--plus front- and back-end loads; and
* use of back-end loads (surrender charges) that phase out over time rather than the front-end loads typical of other types of policies;
In addition, each participant or beneficiary must be provided with a statement explaining any fees and expenses that can be charged on an individual basis (as opposed to a plan-wide basis) and that are not reflected in each DIA's total annual operating expenses, such as fees for processing plan loans or qualified domestic relations orders; fees for investment advice; fees for brokerage windows; commissions or front-end or back-end loads or sales charges; and redemption fees.
This is an annual fee that is charged, typically in lieu of front-end and back-end loads (e.g., the mutual fund does not charge an up-front or backend commission, but instead deducts up to 1.25% of average daily fund assets).
Through Mutual Solutions, front-end and back-end loads of recommended funds are waived.
Many in the mutual fund industry feel both front- and back-end loads keep investors disciplined, and prevent them from shuffling money in and out of the market.
Some providers aggressively pursue the small business market and waive all front- and back-end loads when annual contributions are expected to be greater than a minimum amount ($50,000).
B shares have back-end loads or contingent deferred sales charges (CDSC).
(4.) About 59 percent of all sales of stock and bond fund shares in 1992 were brokered, (5.) Back-end loads, in contrast, are charges paid by investors only on redemptions that occur within a specified period after purchase, expressed typically as a percentage of redemption proceeds.
Some insurance products--particularly universal-life policies--carry surrender charges or back-end loads. These charges can be high initially, but usually decline to zero between seven and 10 years after the policy is issued.
There are no commissions, front- or back-end loads, or surrender penalties.