Contingent deferred sales load

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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Contingent deferred sales load.

A contingent deferred sales load, also called a back-end load, is a sales charge some mutual funds impose when you sell shares in the fund within a certain period of time after you buy them.

These shares are typically identified as Class B shares, and the period that the load applies is often as long as seven to ten years, as determined by the fund.

The charge is a percentage of the amount of the investment you're liquidating. It typically begins at a certain level -- say 7% -- and drops by a percentage point each year until it disappears entirely.

Information about the charge and how long it's levied is provided in the fund's prospectus.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.