The first fee that you will come across is a Load Fee, which is a sales charge. This charge is typically based on a percentage of the assets being invested. For example, if an individual invests $1000 in a fund with a load fee, (assuming a 5% load fee), the individual will receive $950 worth of shares. Load fees may vary, but are typically between 2-8%.

A back-end load represents a redemption fee. There are many rules and many exceptions when looking at redemption fees. Some mutual fund companies will reduce the amount of the fee for individuals that hold (don't redeem) their shares for over a year. Some funds charge this fee whenever shares are redeemed.

The 12b-1 fee can be a maximum of 1.25% of the funds net assets. This fee is used to cover expenses like marketing, broker's commissions and advertising. Bear in mind that this fee can be an annual fee, unlike the front-end or back-end loads which are one-time charges (on each share).

The last fee, one which virtually all mutual fund companies charge is the management fee. These are fees paid to the investment manager of the fund. These costs vary from fund to fund. This fee is typically used to cover the expenses of operating the fund.

As you can see, there are quite a few fees that need to be considered when investing in a mutual fund. Be sure to review these costs when evaluating a mutual fund for investment. These costs will affect the total return on your investment. We'll show you how to evaluate your total and average annual returns in future articles.

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