No-Load Mutual Fund Fees

As the name of the "no-load funds" imply, such funds do not charge any type of sales load. However, there are certain types of fees that are not classified as "sales load". Thus a no-load fund can also charge fees as long as they are not sales loads.

Here are some examples of fees that are not considered to be a sales load:

• redemption fees

  Redemption fees are charged by some mutual funds when shareholders redeem their shares.  They are not considered sales loads despite the fact that they are deducted from redemption proceeds similarly to a deferred sales load. However, sales loads are used to pay brokers whereas redemption fees are paid directly to the fund in order to defray fund's costs related to the shareholder's redemption.

  Redemption fees are limited to 2%.

• purchase fees

  Purchase fees are charged by some mutual funds when shareholders purchase their shares. Again, like redemption fees purchase fees are not paid to a broker but to the fund and therefore they are not considered a front-end sales load. They are typically used to defray fund's costs related to the purchase.

• exchange fees

  Some funds will charge their shareholders an exchange fee if the shareholders transfer (exchange) to another fund that is within the same fund group.

• account fees

  Some funds will charge certain investors an account maintenance fee (for example investors whose account value is less than a specified dollar amount).

In addition to the fees listed above, mutual funds are allowed to pay their annual operating expenses and still be considered no-load funds as long as the combined amount of the 12b-1 fees or the separate shareholder service fees does not exceed 0.25% of average annual net assets of the fund.

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