letter of intent

1. Written notice of an interest in entering into a contract or merger. For example, a pharmaceutical company issues a letter of intent confirming an exclusive licensing agreement with another firm. A letter of intent may or may not be binding, depending on its content and wording.
2. An agreement by a mutual fund shareholder to invest a specific sum over a defined period in order to qualify for reduced sales fees. The reduced fee may apply to an individual fund or to all the funds operated by an investment management group. Compare breakpoint 1. See also right of accumulation.