Load versus no-load¹ mutual funds.

These loads are intended to compensate the advisor who sold you the fund for his or her guidance. If you are comfortable selecting your own funds, on the other hand, no-load funds have no sales charges, allowing you to keep more of your investment.

Consider the impact of loads in the chart at right, comparing two investments with identical average annual total returns of 7% before sales charges. Fund B is even managed by the same management team and holds the exact same securities as Fund A. However, because Fund B is sold through a financial advisor, a 5.75% load is charged to the investor, substantially lowering the earnings after one year. The impact of this frontend load can be lessened by holding the investment over an extended period of time.

This is a hypothetical comparison of two funds with identical 7% one-year average annual total returns before loads. Fund B has a front-end 5.75% load deducted from the initial investment. This chart is for illustration only and does not predict or guarantee the performance of any Wells Fargo Advantage Fund.

Understanding other fees and expenses.

• Management Fee. All funds – load and no-load funds alike – charge a management fee to cover the costs of managing the fund. Investors don't pay this fee directly; instead, it is calculated into the fund's daily share price, or Net Asset Value (NAV). Management fees differ from one fund to another.
• Fund Operating Expenses. Operating expenses are charged by most funds to cover certain costs such as printing and mailing legally required materials to shareholders. These fees are in addition to the fund's management fee.
• 12b-1 Fees. These are annual fees that are charged to cover marketing costs such as advertising and other costs of promoting the fund.

¹ Investments in no-load funds can involve other fees and expenses, which are described in a mutual fund's prospectus.

Next: The relationship between expenses and returns