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Many people have heard the words load and no-load in connection with mutual funds, but do not understand what these terms refer to. Simply put, a load, or loaded, fund is one that has a sales charge. A no-load fund has no sales charge.

How it Works. As noted above, not all funds have sales charges. Those that do simply add them on to the net asset value of the fund, thus coming up with a new, higher offering price per share. It is important to note that the underlying value of the fund's shares do not change; and further, that an investor selling shares will still receive only the net asset value.

Again, an example will be helpful. Let's go back to day one of the We Fly Higher Stock Fund. The beginning net asset value, or price per share, was $10.00. However, if the Fund had a 5% sales charge, shares would be priced at $10.53 to the public. Hence, the price paid per share would consist of two parts: the sales charge of $0.53 per share (5% of $10.53), and the remainder would be the net asset value ($10.53 - $0.53 = $10.00). Thus, in this example, an investor who purchased a share for $10.53 on the first day, and sold it the next day, would lose $0.53 -- the amount of the sales charge (assuming that no other changes in value occurred). Accordingly, there are two daily price listings for so-called "load" funds: the offering price (the investor's purchase price), and the net asset value (the investor's selling price). Who gets the sales charge in a load fund? Why, the salesman (or, broker), and his company, of course! The fund receives none of the sales charge.

A no-load fund is simpler. The net asset value is used for both the purchase price and the selling price. Therefore, the two prices are always identical.
BUYING AND SELLING FUND SHARES Description. Here we are talking about the mechanics of what an investor generally does when buying or selling shares in a mutual fund. In the case of a load fund, the broker usually takes care of the details for you. In the case of a no-load fund, investors usually deal directly with the fund in question. It is really a very simple process, and fund representatives are almost always available, through a toll-free telephone number, to help.

How it Works. Since investors in load funds (presumably) have the assistance of their brokers, we will discuss the process of buying and selling no-load funds. Many investors are a bit daunted by this process, which is unfamiliar to them. If they knew how easy it is, they wouldn't hesitate to "do it themselves"!

Once an investor knows the name of a fund that he or she has an interest in, the first task is to find the toll-free telephone number. A simple call to the fund, requesting a prospectus (a booklet that describes the investment--more below) and application, sets the process in motion. In a few days, these documents arrive in the mail. After reviewing the prospectus, the investor fills out the application, writes a check to the fund, and mails the application and check back to the fund in the enclosed envelope. That's all there is to it! Upon receipt, the fund will then open an account for the investor, purchasing as many shares as the investment dollar amount allows (fractional shares are common). Then, the fund issues periodic statements to the investor, detailing all transactions, including purchases, sales and dividends.

Selling shares is even easier than purchasing them. A simple phone call will initiate the process of the sale of shares, as directed, and money can be sent to the investor by check or wire, depending on how the account was set up. (Helpful tip: Unless you might be tempted to spend money that is too easily available, always sign up for all of the selling options available -- that way, you can get your money more quickly, should you require it, or should you find that one or more options are unavailable when the time to sell comes.)

By the way, you can almost always add to your account, or take partial proceeds out. Most funds have a minimum beginning amount, but after that, almost anything goes in terms of additions and withdrawals (be sure to check the prospectus for details on individual fund operations procedures in this regard).

One last point. Mutual funds are heavily regulated and have proven to be trustworthy over time. You need not have trepidations about dealing through the mail with mutual funds.