A load is a sales charge or commission charged to an investor when buying or redeeming shares in a mutual fund. Sales charge commissions can be structured in a number of ways. They are determined by the mutual fund company and charged by mutual fund intermediaries in mutual fund transactions.Sales charges are used to compensate financial advisers, brokers, and other professionals for their services in selling and servicing the investment. Many investors are unaware of these charges because they may be buried in the fine print of prospectuses or other disclosures. However, these fees can have a significant impact on an investor's return, so it is important to understand how they work before investing in any funds.There are three main types of loads: - front-end loads, back-end loads, and level loads. Front-end load funds charge investors when they purchase shares, while back-end load funds only assess fees upon redemption. Level load funds spread out sales charges evenly over time through ongoing management fees.i) A front-end load is paid as a commission at the time you buy shares of the fund; for example, if you invest $10,000 into a Fund with a 5% front end Load you would pay $500 up front ($10,000 x 0.05 = $500). This means your initial investment would start at $9 500 instead.ii) Back end Loads are assessed when you sell or redeem your shares; for example if you invested $10 000 into Fund B which has a 4% back end Load and decides to sell all your units after one year you would pay 4% on what your units were worth when sold($400); In this case let’s say each unit was worth$25when sold so 400/25=16units *4%=$400.iii) Level Load Funds do not have an up frontor back-load but rather include a trailing sales charge that is deducted from your account each year as long as you hold the fund;for example if you invested$10 000 into Fund C which has a 1% level Load and redeem all of your units two years later they would deduct 2% from the final value of your units (1%2=$200); let’s say each unit equaled $25 at redemption so 200/25=81%-2=$192.
