These mutual funds looked very good to us based on the charts that we were shown, but now, seven months later, we have lost more than 40 percent of our investment and have just learned that in order to sell, we will lose another five percent. We understood that there were no fees involved in the purchase. We are each 79 years of age, live on Social Security and a small pension, and can t afford this. While we are confident that you did not intend to risk your principal or agree to a penalty when you wanted to withdraw your money, this is what you did. When you purchase a mutual fund, you are actually buying shares in a common pool of securities and hoping that the fund managers will perform well.
Some mutual funds offer various types of shares called classes .
Because each class carries with it different fees and expenses, performance results will vary even though each class is invested in exactly the same way. Generally, these multi- class mutual funds can be purchased in Class A, Class B, or Class C. Even though the purpose of the class system is theoretically to give the purchaser a way to choose a fee and expense structure appropriate to their investment goals, most of our readers tell us that they either never understood what they were buying or were not properly informed about the differences until it was too late. Although the prospectus for each fund explains these differences, it would take a Philadelphia Lawyer to understand them. These sales loads are basically recovery of the commissions that are paid to the person who sells the fund. Although sales loads may not exceed 8.5 percent, most funds do not charge the maximum.