Selling or Exchanging Mutual Funds
When you sell shares of a mutual fund you own, you sell them at the NAV calculated after the next close of the US stock market minus any applicable sales charges.
You may also have a capital gain or loss in the year you sell the shares, just as you would if you sold individual securities. If you exchange mutual fund shares from one fund to another fund (in the same mutual fund family), it is also considered a sale for tax purposes and may be a taxable event if you own your shares outside of a tax-deferred account.
The amount of gain or loss from a sale is determined by the difference between your "cost basis" of the fund shares (generally, the original purchase price plus an additional sales charges) and the sale price of the shares (minus any additional fees or charges).
(sale price additional fees or charges) (purchase price + additional sales charges) = Cost Basis
Share Classes of Mutual Funds
Some mutual funds issue classes of shares with back-end load structures. The sales structure for fund classes with back-end loads can vary from fund family to fund family. Be sure to check each prospectus for details. Common types of share classes with back-end loads include:
Sales Charge or Load Structure
Waivers for Sales Charges
Charged at time of redemption
Generally higher fees than Class A Shares
Generally convert to Class A shares after approximately eight years
Charged if redeemed during the first year
Generally highest annual fees
Generally no sales charges after the first year
In the January following the tax year in which you sold mutual fund shares from a taxable account, you will receive documents containing information you'll generally need to file with your tax return. These documents include:
- IRS Form 1099-B: Reports the proceeds from a sale of mutual fund shares during a particular tax year.
- IRS Form 1099-DIV: Reports any dividends and capital gains distributed during the year.
- IRS Form 1099-INT: Reports any interest income received.
For more information on types of mutual funds, reviewing historical performance, and buying funds see our additional mutual fund investing articles.
Mutual funds available without transaction fees may change at any time without notice. Therefore, any mutual funds purchased without a transaction fee may be subject to a transaction fee for subsequent purchases or upon liquidation.