What is an example of a "back-end load" in mutual fund investing?

In mutual fund investing, a "back-end load" refers specifically to a commission that investors pay when they sell their shares in the mutual fund. This type of fee is typically charged as a percentage of the amount being redeemed and is designed to discourage short-term trading of mutual fund shares.

The rationale behind a back-end load is to benefit long-term investors by penalizing those who might sell their shares shortly after purchasing them. Generally, this fee may decrease over time the longer an investor holds the shares, eventually reaching zero if held long enough.

In contrast, other options mentioned relate to different types of fees associated with mutual funds. A commission paid when purchasing shares is known as a "front-end load," while a flat annual fee is more of a management expense that's not tied to the buying or selling of shares. Lastly, a fee taken from dividends does not relate directly to the purchase or sale of shares, making it distinct from the concept of a back-end load.