Definition of Front End Load
Front End Load is a (1) sales charge paid by investors in open end mutual funds, which is paid at the time of purchase.(2) A contractual plan which seeks to assess sales charges in the first years of the plan and may charge up to 50% of the first year’s payments as sales charges.
Applying "Front End Load" to Securities Exams:
When an investor purchases shares of an open end mutual fund that charges a sales charge to invest the investor who purchase the shares will pay the sales charge from the gross amount of the investment and the remaining amount will be invested at the NAV in the mutual fund portfolio. This is the case when the investor purchases "A" shares. In the case of a contractual plan that is organized as a front end load plan up to 50% of the first year’s payments can be assessed as sales charges. The maximum sales charge over the life of the plan is 9%. opo