An annual 12b-1 fee on a mutual fund, if that fee is greater than 0.25% of the fund's assets and if the fund does not charge either a front-end load or a back-end load. If the 12b-1 fee is 0.25% or lower, the mutual fund is a no-load fund rather than a level-load fund. The mutual fund prospectus must disclose whether the fund has a level load and, if so, how much it is.
An annual load that usually is lowered gradually based on the number of years you keep your money in the fund.
An annual sales charge incurred when holding a mutual fund, usually labeled class C shares.
A sales charge that does not change over time. Although a level load will typically be lower than a front-end or back-end load, investors end up paying a higher commission if they hold the fund for many years.
A mutual fund that charges a permanent sales charge, usually at some fixed percentage. See: Front-end loads and back-end loads.
Sales charge ( load) which does not vary depending on how long the investor held the investment.
A level load is usually associated with Class C shares of a mutual fund. It is a sales charge deducted from the net asset value of the shares held by an investor. For example, if you buy 1,000 shares of a mutual fund t has a 1% (annualized) level load, with a share price of $30, the total worth of your shares is $30,000. Assuming the fund's NAV remained the same, you'll be charged a 12b-1 fee of 1% of t amount to pay the load (sales charge), or $300. T 12b-1 fee used to pay the sales charge would bring the worth of your holdings in the fund to $29,700, assuming there were no income (for the sake of our illustration). In actual operation, the 12b-1 fee is deducted monthly, like other fund expenses, and 1/12th of the annual fee is assessed on the average value of your account during the month.
Funds with level loads are sometimes called "C" shares. They do not charge a front-end or back-end load but instead impose a high 12b-1 fee each year. Any fund with no front-end or back-end load that charges a 12b-1 fee in excess of 0.25% is considered a level-load fund.
An annual load that decreases in proportion to the amount invested the longer the money is kept in a mutual fund.
