Redemption Fee
A shareholder fee that some mutual funds charge when investors redeem mutual fund shares (that is, sell shares back to the fund). A redemption fee, which is paid to the fund, is not the same as and may be in addition to a back-end sales load, which is typically used to compensate a broker.
Operating Expenses
The regular and recurring costs of running the fund that shareholders pay indirectly, which can include management fees, distribution and/or service fees (called 12b-1 fees), and other expenses.
Open-End Investment Company
The legal name for a mutual fund and most ETFs. An open-end company is a type of investment company.
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No-Load Mutual Fund
Some mutual funds identify themselves as “no-load” funds. A no-load mutual fund does not charge any type of sales load. But no-load does not mean no fees. Not every type of shareholder fee is a sales load, and a no-load fund may charge fees that are not sales loads (such as purchase fees, redemption fees, exchange fees, and account fees).
Purchase Fee
A fee that some mutual funds charge when investors buy fund shares. This is not the same as, and may be in addition to, a front-end sales load. A purchase fee is paid to the mutual fund, while a front-end sales load is paid to a selling broker.
Prospectus
A document that describes the mutual fund or ETF to prospective investors. Every mutual fund and ETF provides a prospectus with information about the mutual fund's investment objectives, risks, past performance, and expenses. You can get a prospectus from the mutual fund company or ETF sponsor (through its website, by phone, or by mail). A broker or other financial professional also can provide you with a copy.
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