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A sales charge is a fee you pay when purchasing shares
of a mutual fund. By law, sales charges may not exceed 8.5 percent of the amount
invested.
Funds with sales charges are called load funds.
Funds with no sales charge are called no-load
funds.
Redemption fees are charges that may be imposed
when investors sell shares back to a fund. If a fund has a redemption fee that
decreases over time, it is called a contingent deferred sales charge.
This may be used as an incentive to investors to keep their money invested. For
example, a contingent deferred sales charge might start at 5 percent and
decrease by one percentage point per year until it hits zero.
Mutual funds may charge 12b-1 fees to cover
expenses such as advertising, brokers' costs and toll-free telephone lines.
They also may charge management fees, and they may
charge transfer fees (if you transfer money from one fund to another
within the same fund family). |
