Different types of funds, or share classes, have different costs, often based on the services bundled with the fund. Sales fees compensate an investment advisor for the advice they provide a client. There may also be other classes of shares than those shown here with different combinations of fees. Review a fund’s prospectus for all fee details.
No-load funds are offered for sale without sales fees, or sales loads. This class of fund is sold directly to individual investors and generally does not include investment advice. Note: for a fund to be called "no-load" its 12b-1 fee must not exceed 0.25% of assets.
These front-end load funds are offered through brokers, include advice and are sold with a sales charge, usually 3-6%, which is deducted from your initial investment. (The maximum sales load is typically 8.5%). This fee typically goes to the broker selling the fund. These shares can also include a 12b-1, usually 0.25%, deducted from the fund's assets each year.
These back-end load funds are sold without a sales charge, but they include advice and carry a redemption fee, which declines every year until it disappears, usually after six years. This load is called a CDSC or contingent deferred sales charge and it goes to the broker selling the fund. If an investor holds a fund longer than the specified time, say 6 years, it disappears. B shares can also carry a 12b-1 distribution fee which is typically higher than the 12b-1 fee of A shares.
These "level-load" shares include advice, but no sales charge at purchase. They may have a small 1% redemption fee in effect for the first year of ownership, or other specified time period. They can carry a 12b-1 distribution fee, which you pay for as long as you hold the fund.