Multi-Series Risk [Investment] Law and Legal Definition

A mutual fund that offers multiple series of units or shares has an additional risk. Expenses are tracked for the mutual fund as a whole and then deducted from each series separately. If, however, one series is not able to pay all of its expenses, the remainder of the expenses may be deducted from the other series of the mutual fund. As a result, the unit or share price of the other series would drop by its share of the excess expenses. In addition, taxable income is calculated for the mutual fund as a whole or, in the case of mutual funds that are part of a larger mutual fund corporation, for the corporation as a whole, which may cause expenses of one series of the mutual fund to be effectively used by another series of the mutual fund.