What is the meaning of Contingent Deferred Sales Charge?
Contingent Deferred Sales Charge is basically a back-end load or a sales charge which is paid by the mutual fund investors when they sell Class-B fund shares in a particular number of years on the same date on which they were initially bought. Thus in mutual funds which have share classes to determine the time when the investor will pay the fund load, it is the Class-B shares which have a Contingent Deferred Sales Charge during the 5-10 year holding period computed from the time of initial investment.
It thus refers to the percentage of the value of shares being sold and can change with every mutual fund. In the first year of the particular, this is highest and slowly decreases annually till the end of the period when CDSC ultimately drops to zero.