Excerpted from Bogle on Mutual Funds by John C. Bogle, pages 192-195

Regular load. A regular load is an initial sales charge deducted before investment of your money in the fund, formerly in the 8% range but today more commonly in the 4% to 6% range. Most reductions in sales loads have been accompanied by the imposition of 12b-1 distribution fees, thereby shifting some of the distribution costs from the investor who purchases the shares to the fund itself. The fee is paid by the fund's existing shareholders to repay the manager for the cost of bringing in new shareholders. To justify paying a front-end sales load, you must expect to hold the fund's shares for a reasonable period of time. The reason is that a 6% sales load reduces a fund's total return by that amount in a day or a year. Over a period of years, however, the percentage impact of the initial load on the fund's annual return declines (e.g., for a holding period of six years, the fund's total return would be reduced by approximately one percentage point per year).

Contingent deferred sales load (CDSL). A CDSL is a regular load in a different guise. An initial load of, say, 6% is eliminated entirely and replaced by an annual charge (limited to a maximum of 1%, including a service fee of 0.25%) on all the fund's assets. Then, to ensure that the total load paid by each investor in the fund still comes to at least 6% (since the sales representative receives the commission in advance), a deferred sales load (or exit fee) is incurred by each investor, but it is reduced by 1% for each year in which the shares are held. Table 10-2 illustrates how the typical plan works.

It is a conceptually simple scheme, although I have never seen the CDSL rationale explained as clearly in a fund's prospectus. Table 10-2 assumes that the fund sponsor receives the annual 12b-1 fee for as long as the shares are held, so the effective load continues to rise like clockwork with each passing year. If you are a young investor purchasing a fund for your retirement account, your cumulative fee - taking into account total asset-based sales charges and service fees - could exceed 15% or more of the amount initially invested.

This burdensome practice is diminishing under tough new securities regulations that seek to limit total sales charges to a certain percentage of fund sales. (No one knows whether this complex formula will in fact increase or reduce the fee as a percentage of funds assets.) In some cases, however, a separate series of the fund is created without the 12b-1 fee, and an exchange into this series is automatically made after (using the above example) the investor has paid the 6% total. In any event, you will have paid the piper, although to a lesser extent that if they cumulative 12b-1 fee were unlimited. CDSLs are in fact exit loads, and you should be aware that large commissions are payable if shares are redeemed in the early years. The overhang of this cost significantly impairs your investment flexibility.

Low load. A low load fund has a below-normal initial sales charge, usually in the range of 1% to 3.5%. While a low load is a lesser charge, it can have a significant impact on the return achieved by a short-term investor in a stock fund and even by a longer-term investor in a bond fund. (A 3.5% low load on a bond fund held for five years would alone reduce the yield by 0.7% per year - say, from 7.0% to 6.3%.) The fact is that any load should be considered consequential. Low-load funds should be clearly distinguished from no-load funds.

YAHOO! FINANCE TIP Yahoo! Finance reports a mutual fund's sales load information on its profile page. For an example, see VFINX's profile page.