Mutual funds do not provide a similar waiver when contingent
deferred sales charges still apply to a mutual fund account whose owner needs to sell some shares to fund the costs of such a stay.
The next most common are
Deferred Sales Charges, or Back End Load, which is when the fee is enacted when the shareholder sells the fund shares.
Reflects the applicable contingent
deferred sales charges through year six, and Class A expenses for years nine and ten (because Class B shares automatically convert to Class A shares after eight years).
Without a full explanation of higher annual fees, contingent
deferred sales charges and "breakpoints" for quantity discounts, a customer might naturally assume that no front-end cost is the way to go.
Spurring adoption of Rule 12b-1 plans during its early years was a development not anticipated by either the SEC or the industry (110) when the rule was adopted: use of 12b-1 fees in connection with fund classes featuring so-called "contingent
deferred sales charges," often called "CDSCs" or "CDSLs," (111) used to market load funds.
The cost involved with this strategy includes the typical expenses associated with variable annuities, such as mortality and expense risk charges, administrative charges, rider fees, and
deferred sales charges.
The product carries no charges at the time of purchase, no surrender fees, no contingent
deferred sales charges and no annual contract administrative charge.
The accountant must familiarize him- or herself with the difference between front loads, back loads, contingent
deferred sales charges, 12b-1 fees, management fees and various classes of stock that an investor can purchase in the same mutual fund.
Also investors were sold Class "B" mutual fund shares that carry
deferred sales charges (loads) and higher internal expenses than Class "A" shares.
The asset-based fee reductions are available to service programs without contingent
deferred sales charges. They become effective after a review process, which includes a monthly analysis of each plan's asset levels.
Variable annuity contracts characterized by
deferred sales charges, which typically range from 5 percent to 7 percent in the first year, and subsequently decline to zero after five to seven years.
Contingent
deferred sales charge (4%-8% of withdrawals).
