Maximum Sales Fees

• Initial Sales Fee (Front-end Load)
  The initial sales charge or front-end load is a deduction made from each investment in the fund. The amount is generally based on the amount of the investment. Larger investments, both initial and cumulative, generally receive percentage discounts based on the dollar value invested. A typical front-end load might be a 4% charge for purchases less than $50,000, but might decrease as the amount of the investment increases.
• Deferred Sales Fee (Back-end Load)
  Also called a contingent deferred sales charge or back-end load, a deferred load is an alternative to the traditional front-end sales charge as it is only deducted at the time of sale of fund shares. The deferred load structure commonly decreases to zero over a period of time. Atypical deferred load's structure might have a 5% charge if shares are redeemed within the first year of ownership, and decline by a percentage point each year thereafter. These loads are normally applied to the lesser of original share price or current market value. It is important to note that although the deferred load declines each year, accumulated annual distribution and services charges (the total 12b-1 fee) can sometimes offset this decline.
• Redemption Fee
  The redemption fee is an amount charged when money is withdrawn from the fund. This fee does not go back into the pockets of the fund company, but rather into the fund itself and does not represent a net cost to shareholders. Also, unlike contingent deferred sales charges, redemption fees typically operate only in short, specific time clauses, commonly 30, 180, or 365 days. However, some redemption fees exist for up to five years. Charges are not imposed after the stated time has passed. These fees are typically imposed to discourage market timers, whose quick movements into and out of funds can be disruptive. The charge is normally imposed on the ending share value, appreciated or depreciated from the original value.

Sales Charge %

• Front-end Load
  The initial, or front-end, sales charge is a one-time deduction from an investment made into the fund. The amount is generally relative to the amount of the investment, so that larger investments incur smaller rates of charge. The sales charge serves as a commission for the broker who sold the fund.
• Deferred Load
  These are also known as back-end sales charges and are imposed when investors redeem shares. The percentage charged generally declines the longer shares are held. This charge, often coupled with 12b-1 fees as an alternative to a traditional front-end load, diminishes over time.

Expense Projections

Found in the fund's prospectus, these figures show how much an investor would expect to pay in expenses—sales charges (loads) and fees—over the next three, five, and 10 years, assuming a $1,000 investment that grows by 5% per year with redemption at the end of each time period. Expense projections are commonly based on the past year's incurred fees or an estimate of the current fiscal year's fees, should a portion of the overall fee structure change as of the printing of the fund's most current prospectus. Newer funds are only required to print expense projections for one- and three-year time periods since longer-term projections might not be possible to estimate.

Maximum Fees

• Maximum Administrative Fee
  The administrative fee is the fund's maximum allowable charge for its management-fee structure, excluding advisor fees. Costs associated with SEC compliance can also be included under this label. Administrative fees often operate on a sliding scale and include the costs of basic fund operations, such as leasing office space. Investors should note that there is not necessarily a total expense differential between funds with disclosed administrative fees and funds without. Most funds roll administrative costs into their management fees; other funds, especially those with out-of-house administration, prefer to break them out. For this reason, we include administrative fees in the Management Fee area.
• Maximum Management Fee
  The management fee is the maximum percentage deducted from a fund's average net assets to pay an advisor or subadvisor. Often, as the fund's net assets grow, the percentage deducted for management fees decreases. For example, a particular fund might report a management fee of 0.40% on the first $500 million in assets, 0.35% on all assets between $500 million and $1 billion, and 0.30% on assets in excess of $1 billion. Thus, if the fund contains $1.5 billion in total net assets, the advisor scales back its management fees accordingly. Alternatively, the fund might compute the fee as a flat percentage of average net assets. A portion of the management fee can also be charged in the form of a group fee. To determine the group fee, the fund family creates a sliding scale for the family's total net assets and determines a percentage applied to each fund's asset base. The management fee might also be amended by or be primarily composed of a performance fee, which raises or lowers the management fee based on the fund's returns as they compare with an established index (we list the maximum by which the fee can increase or decrease); or a gross income fee, a percentage based on the total amount of income generated by the investment portfolio.
• Maximum 12b-1 %
  The 12b-1 fee represents the maximum annual charge deducted from fund assets to pay for distribution and marketing costs. Although occasionally a flat dollar amount, this fee is almost always expressed as a percentage. Some funds might be permitted to impose 12b-1 fees but are currently waiving all or a portion of the fees. Total 12b-1 fees, excluding loads, are capped by law at 1.00% of average net assets annually. Of this, the distribution and marketing portion of the fee can account for up to 0.75%. The other portion of the overall 12b-1 fee, the service fee, can account for up to 0.25%. Often, funds charging a 12b-1 fee allow shareholders to convert into a share class without the fee after a certain number of years. Investors should check the fund's prospectus for full details.

Actual Fees

• Actual 12b-1 %
  Taken from the fund's prospectus, this number qualifies the 12b-1 fee listed under Sales Fees. The 12b-1 fee represents the annual charge deducted from fund assets to pay for distribution and marketing costs. If fee levels have changed since the end of the most recent fiscal year, the actual fees are most commonly presented as a recalculation based on the prior year's average monthly net assets using the new, current expenses. Although contract-type distribution costs are listed in a fund's prospectus, these are maximum amounts and funds might waive a portion, or possibly all, of this fee. Actual fees thus represent a closer approximation of the true costs to shareholders.
• Actual Management %
  Taken from the fund's prospectus, this area qualifies the management and administrative fees listed under Management Fees. The actual fees listing most commonly represents the costs shareholders paid for management and administrative services over the fund's prior fiscal year. If fee levels have changed since the end of the most recent fiscal year, the actual fees are most commonly presented as a recalculation based on the prior year's average monthly net assets using the new, current expenses. Although contract-type management costs are listed in a fund's prospectus, these are maximum amounts and funds might waive a portion, or possibly all, of those fees. Actual fees thus represent a closer approximation of the true costs to shareholders.
• Total Expense Ratio %
  The annual expense ratio, taken from the fund's annual report, expresses the percentage of assets deducted each fiscal year for fund expenses, including 12b-1 fees, management fees, administrative fees, operating costs, and all other asset-based costs incurred by the fund. Portfolio transaction fees, or brokerage costs, as well as initial or deferred sales charges are not included in the expense ratio. The expense ratio, which is deducted from the fund's average net assets, is accrued on a daily basis. If the fund's assets are small, its expense ratio can be quite high because the fund must meet its expenses from a restricted asset base. Conversely, as the net assets of the fund grow, the expense percentage should ideally diminish as expenses are spread across the wider base. Funds might also opt to waive all or a portion of the expenses that make up their overall expense ratio.
• Benefits
  The expense ratio is useful because it shows the actual amount that a fund takes out of its assets each year to cover its expenses. Investors should note not only the current expense-ratio figure, but also the trend in these expenses; it could prove useful to know whether a fund is becoming cheaper or more costly. When considering high expenses vs. low expenses, potential investors must also consider the fund's objective and its size. Certain objectives, such as foreign-equity funds, have higher costs and, therefore, higher expense ratios. As for size, smaller funds are normally costlier than larger funds, because they do not have the benefits of economies of scale.