This article is from the Investing Articles: Mutual Funds series.
Management fees are paid to fund administrators for their professional advice and are usually computed by taking a certain percentage of the total value of the assets, usually less than one percent.
Custodian fees are fees paid to trustees or directors of an institution that holds all the assets of the mutual fund. This is usually a small fee (about 1/10 of 1%).
Sales charges (sales commissions) can range from 1% to 8% of the amount you have to invest. Some funds reduce the percentage if you invest a greater amount in the fund. Your broker should be able to give you a scale showing how much sales charges are.
Contingent deferred sales charges are sometimes levied to discourage movement in and out of funds. Generally between one and five percent of the redemption amount, they apply for 1-6 years following the initial purchase and are usually on a declining scale.
12-B1 distribution plans allow fees to be assessed over the life of the investment to compensate the distributor of the fund. These range from .25 to 1.25% of the average net asset value per year. redemption fees are extremely rare but may be charged; generally 1-2% of the amount redeemed.