Definition of Contractual Plan

Contractual Plan is a mutual fund accumulation plan under which the investor agrees to contribute a fixed sum of money over time. If the investor does not complete or terminates the contract early, they may be subject to penalties.

Applying "Contractual Plan" to Securities Exams:

An investor may elect to purchase mutual fund shares though a contractual plan when the investor can not meet the minimum investment required by the fund company. In cases where a mutual fund has a very high minimum investment a contractual plan will offer the investor the ability to invest in the fund over time through the plan.

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