A mutual fundâs net asset value is $50, but the fund charges an exit fee of 1 percent of net asset value and a 4 percent load fee (front-loaded). An individual client purchases the shares of the mutual fund. During the year, the fund distributes $2.34. The net asset value rises to $58.38 and the investor redeems the shares.

a) What is the percentage return the fund can report that was achieved by its portfolio managers?

b) What is the percentage return the individual earned on the investment?

Why is this answer different from the answer in part (a)?

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Casey DurganLv2

28 Sep 2019

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Suppose an individual invests $20,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3.0 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating expenses (or 12b-1 fees) are 1.0 percent. The annual fees are charged on the average net asset value invested in the fund and are recorded at the end of each year. Investments in the fund return 15 percent each year paid on the last day of the year. If the investor reinvests the annual returns paid on the investment, calculate the annual return on the mutual funds over the two-year investment period.

A. The individuals actual investment, after the load fee is deducted:

B. Annual operating expenses:

C. Value of investment at end of year 1:

D. The investors return on the mutual fund investment after 1 year:

E. Value of investment at end of year 2:

F. Thus the investors annual return on the mutual fund over a 2 year period:

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A. The individuals actual investment, after the load fee is deducted:

B. Annual operating expenses:

C. Value of investment at end of year 1:

D. The investors return on the mutual fund investment after 1 year:

E. Value of investment at end of year 2:

F. Thus the investors annual return on the mutual fund over a 2 year period:

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QUESTION 1

The World Income Appreciation Fund has current assets with a market value of $4.7 billion and has 190 million shares outstanding. What is the net asset value (NAV) for this mutual fund?

QUESTION 2

The Madura HiGro Fund has a net asset value of $42 per share. It charges a 3.2 percent load. How much will you pay for 200 shares?

QUESTION 3

The World Income Appreciation Fund has current assets with a market value of $4.5 billion and has 130 million shares outstanding. The fund has a current market price quotation of $35.15. What is the front-end load in percentages?

QUESTION 4

You are going to invest in a stock mutual fund with a 5 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 6 percent return and an expense ratio of 0.1 percent. If you plan to keep your investment for 2 years, what annual percentage return must the stock mutual fund earn to exceed an investment in the money market fund?

QUESTION 5

You invested $10,000 in a mutual fund at the beginning of the year when the NAV was $41.53. At the end of the year the fund paid $0.31 in short-term distributions and $1.27 in long-term distributions. If the NAV of the fund at the end of the year was $43.27, what was your return for the year?

QUESTION 6

A closed-end fund has total assets of $330 million and liabilities of $800,000. Currently, 20 million shares are outstanding. If the shares currently sell for $16.06, what is the percentage premium or discount on the fund? (Note: Enter premium as a positive number and a discount as a negative number.)

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