What is the formula to calculate the Sales Charge?

The formula to calculate the Sales Charge is derived from the relationship between the Public Offering Price (POP) and the Net Asset Value (NAV) of a mutual fund or investment product. Specifically, the Sales Charge represents the cost that investors incur when they purchase shares.

When calculating the Sales Charge, you take the difference between the POP and NAV. The POP is the price at which shares are sold to the public, and the NAV is the underlying value of the fund's assets minus its liabilities. Therefore, by subtracting the NAV from the POP, you get the amount that is charged as a sales commission, which helps cover the costs incurred by the distributor or broker.

This relationship is essential for investors to understand, as it helps them evaluate the total costs associated with their investment relative to its actual value. Thus, understanding that the Sales Charge is expressed as the difference between the POP and NAV allows investors to make informed decisions about their purchases.