Mutual funds must provide a copy of the fund’s prospectus to shareholders after they purchase shares, but investors can – and should – request and read the fund’s prospectus before making an investment decision. There are two kinds of prospectuses: (1) the statutory prospectus; and (2) the summary prospectus. The statutory prospectus is the traditional, long-form prospectus with which most mutual fund investors are familiar. The summary prospectus, which is used by many funds, is just a few pages long and contains key information about a fund.

A class of fund shares without any front-end load, deferred sales charge, or other asset-based fee for sales or distribution.  A broker would be expected to charge its customers commissions for effecting transactions in Clean Shares.

Alternative mutual funds (sometimes called alt funds or liquid alts) are publicly offered, SEC-registered mutual funds that hold non-traditional investments or use complex investment and trading strategies.  Investors considering alt funds should be aware of their unique characteristics and risks. For more information, please read our Investor Bulletin:  Alternative Mutual Funds. 

A sales charge, also called a sales load or load, is a fee investors pay when they buy (front-end sales load) or redeem (back-end sales load) shares in a mutual fund, similar to a commission.

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Distribution fees are paid out of fund assets to cover the marketing and selling of fund shares, such as compensating brokers and others who sell fund shares. These fees also pay for advertising, printing and mailing prospectuses to new investors, and for printing and mailing sales literature to prospective investors. Typically, distribution fees apply to mutual funds but not to ETFs. Distribution fees sometimes are referred to as 12b-1 fees.

A back-end sales load, also called a deferred sales charge or deferred sales load, is a fee investors pay when they redeem mutual fund shares (that is, sell shares back to the fund). Funds typically use these fees to compensate brokers who sell the fund’s shares. The most common type of back-end sales load is a contingent deferred sales load (CDSL), also called a contingent deferred sales charge (CDSC).

All of a fund's annual operating expenses combined, which can include management fees, distribution and/or service fees (called 12b-1 fees), and other expenses. You'll find this total in the fund's prospectus fee table, expressed as a percentage of the fund's average net assets (called the expense ratio).

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The percentage of a fund's average net assets used each year to pay the fund’s operating expenses, which can include management fees, distribution and/or service fees (called 12b-1 fees), acquired fund fees and expenses, and other expenses. You’ll find this figure in the fund’s prospectus fee table.

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A closed-end fund, legally known as a closed-end investment company, is one of three basic types of investment companies. A closed-end fund invests the money it raises from investors, often in an initial public offering, in stocks, bonds, money market instruments and/or other securities.

Different types of shares issued by a single fund, sometimes referred to as Class A shares, Class B shares, and so on. All classes of a fund hold identical investments and have the same investment objectives and policies. But each class has different fees and expenses, and therefore, each class will have different performance results.

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