Most people are not aware of the high costs of mutual funds, vis-a-vis profits. For example, last year AIM CONSTELLATION, which is an average mutual fund, returned 14.6%. However, the fund deducts a 5.5 % initial sales charge and then charges 1.2% annual fee. Therefore, if you were to invest $ 1,000, you would have only $950 to invest after the initial charge. If you then added 14.6 % (the fund return), you would have $ 1,088.70 at the end of the year. From that, the fund would deduct $ 13.06, leaving a net of $1,075.64. That is a profit of $ 75.64 on an investment of $ 1,000. The initial and annual charges would be $ 63.06 (initial charge plus annual charge). Therefore that means the fund would have charged you 83.38 % of profits ($63.06 / 75.64). If it were a subsequent year, the fees would still be 9.47 % of profits. Thus. at the end of five years. you would have paid an average of 24.25 % per year of profits.