New Sales Option for E&p Investors.
If you are considering putting money into any Elliott & Page fund, be aware of their new “Shortened DSC” schedule. It’s another way to buy back-end load funds, and it could be to your advantage to use it.
E&P’s regular DSC (deferred sales charge) plan reduces the commission you are assessed if you sell your units from 6% to zero over six years (so if you sell in the seventh year, you pay nothing). The new plan charges you 3% if you sell within the first two years. After that, you’re off the hook.
Clearly, this is a better deal from an investor point of view. Whether your advisor will tell you about it is another matter. He/she receives an immediate sales commission of 5% if you buy under the standard DSC plan. If you select the new short schedule, the commission is only 2%. However, the advisor does receive a higher annual “trailer fee” if the new schedule is used. For most funds, it’s 1% a year of the value of your assets, compared to 0.5% under the longer plan.
E&P now offers four different sales options: front-end load, low-load, and the two beck-end load choices. Ask your advisor to explain the pros and cons of each before making a section. My personal preference is to buy front-end load funds at zero commission.
That advice applies for all purchases of load funds. Many companies have introduced alternative commission options. Ask for a run-down of all your choices before making a commitment.
From the January 2002 edition of Mutual Funds Update, a monthly newsletter published and edited by Gordon Pape.