Exchange Fee

A fee that some funds impose on shareholders if they exchange (transfer) to another fund within the same fund group.

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 funds separately impose on investors for account maintenance. For example, individuals with accounts below a specified dollar amount may have to pay an account fee.

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

The amount that investors pay when they buy (front-end load) or redeem (back-end load) shares in a mutual fund, similar to a commission. The SEC's rules do not limit sales loads a fund may charge, but FINRA's rules cap mutual fund sales loads at 8.5% of the purchase or sale, or at lower levels, depending on other fees and charges.

Investment Company

A company that issues and invests in securities. The three types of investment companies are mutual funds, closed-end funds, and unit investment trusts.

Front-end Load

An upfront sales charge investors pay when they buy fund shares. It generally is used by the fund to compensate brokers. A front-end load is deducted from the purchase and reduces the amount available to buy fund shares.

Deferred Sales Charge

A sales charge, also known as a "Back-end Load," 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 for investment portfolio management. A fund's management fees appear under Annual Fund Operating Expenses in the fee table in the fund's prospectus.

Shareholder Service Fees

Fees paid to respond to inquiries from investors and provide them with information about their investments.

Subscribe to Mutual Fund