The costs of owning
When you own mutual funds, you pay annual
asset-based fees each year you own the fund, figured as a percentage
of your account value. The fund company sets the fees, which vary
from company to company and from fund to fund within a company.
 The fees cover the costs of managing the
fund, making investments, and providing shareholder services.
You don't pay the fees as a separate expense. Instead, they
are subtracted before the fund's net asset value is computed
and your account is credited with your share of the fund's
gains or losses.
Other fees
Redemption charges
are a type of back-end
load some fund companies charge on certain funds to discourage
frequent in-and-out trading.
Marketing fees
(called
12b-1 fees)
cover marketing and advertising expenses, and are sometimes used
to pay employee bonuses. About two-thirds of all mutual funds, both
load and no-load, charge these fees, which are capped at 1% of assets. You can find out about the
fees a fund charges in the prospectus. |
