A guide to mutual fund fees

In a tough investing climate mutual fund investors should take note of what investing fees they're being charged. Costs associated with an individual investor's transactions and account are listed in a fee table, located near the front of a fund's prospectus, under the heading "Shareholder Fees."

They include:

-Sales Loads. A fee charged to compensate the brokers. The SEC does not limit sales load charges, but the Financial Industry Regulatory Authority, a non-governmental securities company regulator, does not permit mutual fund sales loads to exceed 8.5 percent.

-Redemption Fee. A fee some funds charge when shares are redeemed. It is typically used to defray costs associated with the redemption and is paid directly to the fund, not to a broker. The SEC limits to 2 percent.

-Exchange Fee. Charged to transfer from one fund to another within the same group.

-Account Fee. Some funds charge for maintenance especially on accounts below a certain dollar amount.

-Purchase Fee: Charged to purchase shares. It is paid to the fund not to a broker and is typically imposed to defray costs associated with the purchase.

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Recurring, fund-wide operating expenses are taken out of the fund assets and are identified in the fee table in the fund's prospectus under the heading "Annual Fund Operating Expenses."

They include:

-Management Fees. Paid out of fund assets to the investment adviser for managing the investment portfolio, and administrative fees payable to the investment adviser that are not included in the "Other Expenses" category.

-Distribution or Service Fee also called 12b-1 Fees. Paid out of fund assets to cover distribution expenses and sometimes shareholder service expenses. They may also be used to pay for marketing and selling fund shares. The SEC does not limit 12b-1 fees but FINRA says marketing and distribution expenses cannot exceed 0.75 percent of a fund's average net assets per year.

-Other Expenses. Includes expenses not included in above categories. They include shareholder service expenses not included in the 12b-1 fees, custodial expenses, legal expenses, accounting expenses, transfer agent expenses and other administrative expenses.

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Source: U.S. Securities and Exchange Commission: http://www.sec.gov/answers/mffees.htm