Exchange Fee
A fee that some mutual funds impose on shareholders if they exchange (transfer) shares in one mutual fund for shares of another mutual fund within the same mutual fund family.
Conversion
A feature some funds offer that allows investors to automatically switch from one fund class to another, typically one with lower annual expenses, after a set period of time. The fund's prospectus or profile will state whether the fund has a conversion feature.
Account Fee
A fee that some mutual funds impose on investors for account maintenance. For example, some mutual funds charge this fee on accounts valued at less than a specified dollar amount.
Market Index
A measurement of the performance of a specific "basket" of stocks considered to represent a particular market or sector of the U. S. economy. For example, the Dow Jones Industrial Average (DJIA) is an index of 30 "blue chip" stocks of U.S. companies.
Load
A load, also called a sales load or sales charge, is a fee that investors pay when they buy (front-end sales load) or redeem (back-end sales load) shares in a mutual fund, similar to a commission.
Investment Company
A company or fund that pools money from many investors and invests that money primarily in securities. Each investment company share represents an investor’s part ownership in the fund’s underlying investments and the income those investments generate.
There are three basic types of investment companies:
Open-end investment companies or open-end funds—which sell shares on a continuous basis, and depending on how structured, can be purchased and sold/redeemed from the fund or, in the case of ETFs, on an exchange;
Front-end Sales Load
A front-end sales load, also called a front-end load or front-end sales charge, is an upfront fee investors pay when they buy mutual fund shares. Funds typically use these fees to compensate brokers who sell the fund’s shares. A front-end sales load is deducted from the purchase and reduces the amount available to buy fund shares.
Deferred Sales Charge
A deferred sales charge, also known as a deferred sales load or back-end sales load, is a fee investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers.
Management Fee
A fee paid out of fund assets to the fund's investment adviser (or its affiliates) for managing the fund’s investment portfolio. Management fees may also include administrative fees payable to the investment adviser that are not included in the Other Expenses category of the fund’s prospectus fee table. Management fees appear under Annual Fund Operating Expenses in the prospectus fee table.
Shareholder Service Fees
Shareholder service fees compensate individuals who respond to inquiries from investors and provide them with information about their investments. Typically, shareholder service fees apply to mutual funds but not to ETFs. These fees are sometimes included in a fund’s 12b-1 fees.