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Chapter 11. Mutual Funds > Mutual Fund Expenses

Mutual Fund Expenses

Mutual funds have their expenses divided into four possible areas: sales charges, management fees, fund expenses, and 12(b)(1) fees. The specific charges associated with a fund will be found in the prospectus and should be clearly stated. In fact, by law, the fund's fees and expenses must be clearly disclosed to investors in a standardized fee table at the front of the fund's prospectus. The fee table breaks out the fees and shareholder expenses and allows investors to easily compare the cost of investing in different funds. If it takes an attorney who doubles as a rocket scientist to understand the charges, you are well advised to proceed with caution.

Be Careful

Some mutual funds, particularly younger funds without a lot of assets, will waive the management fee for a period of time or until the fund reaches a certain level of assets. This is not a bad thing, but you should understand that it is not likely that the management fee will be waived forever.



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