Fund Costs

Annual marketing and distribution fees charged by mutual funds, named after SEC rule 12b-1. Limited to 0.25% for no-load funds and 1.00% maximum for all funds. Included in expense ratio.

Example: A fund with 1.2% expense ratio might include 0.75% management fee and 0.25% 12b-1 fee....

The investment threshold at which mutual fund sales charges (loads) decrease, encouraging larger investments through volume discounts. Breakpoints typically occur at specific dollar amounts ($25K, $50K, $100K, $250K, etc.). Brokers must disclose available breakpoints and inform clients of rights of accumulation and letters of intent. Selling shares just below a breakpoint to avoid the reduced load (and earn higher commission) is a prohibited practice called a "breakpoint sale."

Example: A fund charges 5.75% on investments under $50K, 4.50% for $50K-$99K, and 3.75% for $100K+. An invest...

The annual fee charged by a mutual fund or ETF, expressed as a percentage of average net assets. Includes management fees, administrative costs, and 12b-1 fees. Automatically deducted from fund returns, reducing net performance.

Example: A fund with a 1.00% expense ratio charges $100 annually per $10,000 invested. On a $50,000 investmen...

A sales charge (commission) paid when buying or selling mutual fund shares, compensating brokers and distributors. Front-end loads are deducted at purchase (maximum 8.5% per FINRA); back-end loads (CDSC) are charged at redemption and typically decline over 6-8 years. No-load funds charge no sales loads but may charge 12b-1 fees up to 0.25%.

Example: An investor buying $100,000 of Class A shares with a 5.75% front-end load pays $5,750 in sales charg...

A mutual fund privilege allowing investors to combine the current value of existing holdings with new purchases to qualify for breakpoint discounts on sales charges. Applies to the investor and immediate family members (spouse, children under 21), differs from Letter of Intent (which commits to future purchases). Automatic and requires no written commitment.

Example: An investor owns $40,000 of ABC mutual fund (current NAV) and wants to purchase $15,000 more. The fu...