| Mutual funds are divided into three
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| | commission. The important thing to note
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| categories with regards to fees, based on
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| | is that you must hold the shares for a
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| how much you will have to pay in charges,
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| | certain number of years to have these
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| and commissions - load funds, low-load
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| | fees waived. If you sell before this
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| funds, and no-load funds. As you might
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| | time is up, you will be charged a fee
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| expect, load funds typically charge fees,
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| | based on how long you have had the
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| including commissions and other fees.
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| | shares. The fee typically goes down by
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| Low-load funds also charge fees, but
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| | one percentage point per year, so the
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| typically not as much as load funds. And
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| | longer you keep the shares, the less the
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| no-load funds are not completely free of
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| | fee will be.
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| charge, either. They do typically have
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| | Most funds convert Class B shares to
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| fees, but they are usually very low.
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| | Class A shares after the period of
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| Bear in mind that even no-load fees will
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| | deferred charge ends.
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| typically charge you a fee if you sell
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| | There are also Class C shares, which are
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| your shares within a certain time frame
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| | typically about 1% per year, and other
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| after purchase.
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| | classes that may be listed in the fund's
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| With mutual funds, the class of shares
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| | prospectus. The prospectus will tell you
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| you buy will usually determine the fees
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| | the fund's specific fees and terms for
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| you are charged. Remember, even with
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| | the various classes.
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| no-load funds, there are still certain
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| | There are typically two types of fees
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| charges involved. Mutual funds aren't
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| | charged by mutual funds. The first
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| usually set up for charity purposes, so
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| | category is transaction expenses. This
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| the fund has to make money, too!
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| | category includes load charges, and the
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| With Class A shares, you will typically
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| | charges that you may incur when selling
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| be charged load charges up front. This
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| | shares. These are paid by the investor.
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| is a sales commission that will usually
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| | Operating expenses include those 12b-1
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| vary between 2% and 6% of the purchase.
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| | fees mentioned earlier, as well as the
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| For example, if you invest $5,000, and
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| | management fees for the fund. These
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| there is a 5% fee, then you will actually
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| | amounts are subtracted from the fund's
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| only have $4,750 available for the direct
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| | return, and come out of the total made by
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| purchase of shares. You will also have
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| | the fund before any money is distributed
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| fees charged annually. These annual fees
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| | to investors. A good mutual fund
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| are called 12b-1 fees, and are charged
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| | typically has an expense ratio of less
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| even by no-load funds.
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| | than 1.5%.
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| Class B shares typically have higher
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| | Something to bear in mind when choosing a
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| 12b-1 fees than Class A shares. These
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| | fund is to look at the fees as only one
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| fees will be based on a percentage of the
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| | part of the big picture. Many investors,
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| account. The good thing about Class B
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| | especially beginners, head straight for
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| shares is that the up-front commissions
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| | no-load funds because they don't want to
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| and fees are usually waived, and you can
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| | be charged so much in fees. But a fund
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| put 100% of your investment money into
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| | with high fees might vastly outperform a
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| shares immediately. The same $5,000 you
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| | similar fund with lower fees, thus
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| had before will buy you $5,000 worth of
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| | bringing you much more money, even after
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| shares instead of the $4,750 you could
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| | the fees are considered.
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| have purchased if you were charged a 5%
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