LOAD VS. NO-LOAD

There are "load" mutual funds and "no-load" funds. A load fund is bought through a broker or salesperson who helps you with your selection and charges a commission ("load")—typically (but not always) 8.5% of the total amount you invest. This means that only 91.5% of the money you invest is actually applied to buy shares in the pool. You choose a no-load fund yourself without the help of a broker or salesperson, but 100% of your investment dollars go into the pool for your account.

Which are better—load or no-load funds? That really depends on how much time and effort you want to devote to fund selection and supervision of your investment. Some people do not have neither the time, inclination nor may aptitude to devote to the task— for them, a load fund be the answer. The load may be well justified by long-term results if your broker or salesperson helps you invest in a fund that performs outstandingly well.

In recent years, some successful funds that were previously no-load have introduced small sales charges of 2% or 3%. Often, these "low-load" funds are still grouped together with the no-loads, you generally still buy directly from the fund rather than through a broker. If you are going to buy a high-quality fund and hold it a number of years, a 2% or 3% sales charge shouldn't discourage you.