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Finance Dictionary and Glossary of Investment Terms
Contingent Deferred Sales Load
An ""exit fee"" that some mutual funds charge to customers who sell their shares within five or six years of making their investment. It''s a little misleading for the company to call itself a ""no-load fund"" because you''ll have to pay a load if you sell early.Contingent deferred sales charges can be hefty, so don''t invest in the fund unless you plan on leaving the money there for several years. It''s not unusual for the funds to levy a 6 percent charge if you pull out the money in the first year, a 5 percent penalty if you leave in the second year, and so on.Even worse, some funds base their contingent fees on the amount you have in the account when you actually make a withdrawal rather than on the amount you originally invest. So, if you invested $10,000 and closed the account after it had reached $15,000, the effective rate of the penalty could be much higher than 5 percent or 6 percent.