penalty plan

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Penalty Plan

In a mutual fund, a plan in which all sales fees are paid in the first few years of ownership in the fund. This means that if the shareholder redeems his/her shares in the first few years of ownership, sales fees are deducted, and the shareholder only receives a small portion of his/her original investment. These deductions gradually lessen with time and eventually go to zero in order to encourage long-term investment in the fund. The rules governing penalty plans were established in the Investment Company Amendments Act of 1970.

penalty plan

A mutual fund accumulation plan in which sales fees for the entire obligation are deducted from shares purchased in the first few years that the plan is in effect. In the event that the investors redeem the shares after a short time, only a small portion of the purchase price will be refunded. Sales charges and penalty plans are regulated by the Investment Company Amendments Act of 1970.
References in periodicals archive ?
SORE POINT Leigh Griffiths's penalty plans backfire as the striker misses his spot-kick chance
The Connecticut Network to Abolish the Death Penalty plans a May 8-13 march from Gallows Hill at Trinity College in Hartford, the site of executions in colonial days, to the prison in Somers.
The Japan Parliamentary League Against the Death Penalty plans to submit the bill as early as June, which proposes introducing life imprisonment without parole, while suspending executions for four years, in what it considers ''a milestone'' on the road to abolishing capital punishment.
Improvements in the pricing and conditions for access to the parts of the local phone network known as unbundled network elements, including UNE-P, to ensure BellSouth does not use its market dominance to unfairly deter newer competitors; * Regulatory oversight that works to ensure ethical marketing and sales practices; * Improvements in the BellSouth operation support systems that CLECs depend upon to do business with their customers; and * The enforcement of BellSouth performance measurement and penalty plans by state public utility commissions throughout the Southeast.