Breakpoints
If you make a substantial investment in a mutual
fund with a
front-end load,
you may be entitled to a discount on sales
charges. Many funds offer discounts to investors who invest up
to certain thresholds, called
breakpoints.
For example, a fund might charge a 5% load on investments lower
than $25,000, a 4.25% commission on investments between $25,000
and $50,000, and a 3% load on investments over $50,000. Commissions
may fall as low as 2.5% for investments of over $250,000.
Mutual funds are not required to offer breakpoints,
and those that do set their own terms and conditions. However, if a fund offers
breakpoints, it is obligated to disclose them. Nor can a firm that is a member of the Financial Industry Regulatory Authority (FINRA) sell you shares of a mutual fund at an amount just
below a breakpoint to earn a higher commission.
You can find information about breakpoint criteria
and schedules in the fund's prospectus and statement of additional
information, or on its Web site.
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