Ch. 4.3 Reducing Front-End Loads

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Last updated 2:02 PM on 9/8/26
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7 Terms

1
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Breakpoints

dif lvls of quantity discounts on mutual fund sales charges

  • greater the dollar amt of purchase the lower the sales charge

  • bc of this investors may combine related acts to have a better breakpoint

  • allows customer to lower front-end sales charges by investing higher amts


2
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Letters of Intent (LOI)

where investor tells fund company of their intention to add the additional funds needed to reach a specific breakpoint within 13 months


3
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Letters of intent specs

  • extra shares purchased are held in escrow

  • customer who completes LOI receives escrow


4
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Breakpoints vs Breakpoint Sales

sale just below the breakpoint

5
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Rights of Accumulation

allow for investor to qualify for reduced sales charges

  • only available for later investments

  • don’t impose time limits


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Combination Priviledge

investor may receive a reduced sales charge by combining investments in two or more funds within same family to reach breakpoint

7
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Exchange priviledge

allows investor to redeem an investment in one fund for an equal investment in another fund w/o paying additional sales charge

  • may have tax consequences