ProductsQuestion 40 of 110
A shareholder elects to have all fund dividends and capital gains distributions automatically reinvested. Those reinvested amounts purchase additional shares at:
a.The public offering price, including the full sales charge
b.Net asset value, with no sales charge
c.A 50% discount to the public offering price
d.The prior month's average share price
Explanation
Automatic reinvestment at NAV is one of the features a fund must offer to charge the maximum sales load, and it lets distributions compound without a new sales charge. Charging the full load on reinvested distributions would penalize long-term holders. Neither a fixed 50% discount nor a monthly average price is used, because forward pricing governs the transaction.
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