Breakpoints and Rights of Accumulation (ROA)

Breakpoints in a mutual fund represent areas of discount on the sales price of investors. They are a way of rewarding investors with more than a specific amount of money in the fund with lower charges. When you reach a break point, you are given rights of accumulation to the lower fee.

Breakpoints and ROA

You are entitled to an ROA discount at several breakpoints throughout the time you hold shares in a mutual fund. It does not matter how long you hold the shares: all that matters is the amount you invest. The more you invest, the more breaks you will get, similar to "loyal customer" discounts. The breakpoints in your mutual fund are determined by the fund itself.

Example

Your mutual fund may have a breakpoint at $30,000. You currently have $26,000 invested and want to invest $10,000 more. The traditional sales charge would be 6.0 percent, but you qualify for the rights of accumulation to a lower 5.25 percent sales charge because you are surpassing the breakpoint. The entire $10,000 sum you are investing will be charged the lower sum, not just the $6,000 you are investing past the breakpoint of the fund.

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