deferred sales charge


Also found in: Acronyms.

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.

deferred sales charge

A fee levied by some open-end investment companies on shareholder redemptions and by many insurance companies on annuities. The charge of up to 5% of the value of the shares being redeemed frequently varies inversely with the period of time the shares have been owned. A deferred sales charge is indicated in mutual fund transaction tables in newspapers by the symbol r. Also called back-end load, exit fee, redemption charge. See also contingent deferred sales charge.
References in periodicals archive ?
Fees Paid Directly from Shareholder's Investment Class A Class B Class C Maximum sales charge 5.75%1 None None imposed on purchases (expressed as a percentage of the offering price) Maximum sales charge None None None imposed on reinvested dividends Maximum deferred sales charge None (2) 5.00% (3) 1.00% (4) Redemption or exchange fees None None None (1) Sales charges are reduced or eliminated for purchases of $25,000 or more.
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 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.
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.