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Definition Of Breakpoint Sale:


The sale of a mutual fund at a set dollar amount that allows thefundholdertomove into a lower sales charge bracket.
If, at the time of investment,an investor is unable to come up with thefunds needed to qualify for the lower fee, he or she can sign a letter of intent promising to reachthetotal amount, or breakpoint, in a set time period.Any sales that occur justbelowabreakpointare considered unethical and in violation of FINRA (formerly the NASD) rules.An example of a breakpoint salewould be when aninvestor plans to invest $95,000in a front-load mutual fund andfaces a charge of 6.25% or $6,125. If the investor isproperly advised,he or shewill be told that adding $5,000 for a total investment of $100,00 will qualify the sale fro a lower sales charge of 5.5%, or $5,500. This means that the investorwill essentially have $5,625 more invested than the initial purchase plan due to the savings in sales charges.

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