The Husky Fund’s portfolio consists of the following stocks at the beginning of the year:

500 Shares Stock IBM Price $ 180.00

4,000 Shares MSFT $ 30.00

There are 5000 shares outstanding. The fund charges 6% front-end load. The first year, the fund’s assets’ value increases by 10% and the fund pays out $10,000 as distributions to its investors. The fund charges management fees of .5% and 12b-1 fees of .5%.

Required

a) What is the fund’s NAV at the beginning and at the end of the first year?

b) What is the reported return of the mutual fund in the first year?

c) Suppose the mutual fund’s return stays the same each year. What is the return to an investor investing in the fund for 10 years?

Answer rating: 100% (QA)

To calculate the net asset value NAV of the Husky Fund at the beginning and end of the first year we need to consider the initial value any distributi... View the full answer