Drop-Box:

1. always; do not necessarily

5. front-end load; low-load; no-load; back-end load

Attempts Average / 1 4. Comparing mutual funds Understanding the Costs Involved in Mutual Fund Investments Lorenzo is debating purchasing a mutual fund, but he has some questions for his financial advisor, Neha. The following table presents information on four different open-end mutual funds that Lorenzo and Neha are discussing. Use the information in the table to answer the questions that follow. FUND NAV NET CHG YTD % RET Mint p 13.32 -0.04 2.8 PwrSL r 29.77 0.06 5.7 GMAR 37.81 0.20 8.2 TopLA 38.21 0.29 9.3 LORENZO: After some research, I've narrowed it down to these four funds, but can you explain to me the relationship between 12b-1 fees and fund performance? NEHA: Generally, funds that charge 125-1 fees, such as Mint p, outperform funds that do not charge these fees. LORENZO: What about front-end load fees? For example, suppose TopLA has a front-end load fee of 6%, when do I pay this fee? NEHA: If you purchase 100 shares of this fund at the NAV, you will pay a commission of $ but when you sell these shares you will pay $ in front-end fees. LORENZO: It sounds like these fees could start to add up. What's the most I can expect to in fees? % in back-end load NEHA: If a fund charges a 4% front-end load and a 2.5% 12-b1 fee, then it can charge a maximum of only charges without violating the cap. LORENZO: Thanks! This was really helpful. So it sounds like you'd recommend looking for funds whenever possible. Attempts Average / 1 4. Comparing mutual funds Understanding the Costs Involved in Mutual Fund Investments Lorenzo is debating purchasing a mutual fund, but he has some questions for his financial advisor, Neha. The following table presents information on four different open-end mutual funds that Lorenzo and Neha are discussing. Use the information in the table to answer the questions that follow. FUND NAV NET CHG YTD % RET Mint p 13.32 -0.04 2.8 PwrSL r 29.77 0.06 5.7 GMAR 37.81 0.20 8.2 TopLA 38.21 0.29 9.3 LORENZO: After some research, I've narrowed it down to these four funds, but can you explain to me the relationship between 12b-1 fees and fund performance? NEHA: Generally, funds that charge 125-1 fees, such as Mint p, outperform funds that do not charge these fees. LORENZO: What about front-end load fees? For example, suppose TopLA has a front-end load fee of 6%, when do I pay this fee? NEHA: If you purchase 100 shares of this fund at the NAV, you will pay a commission of $ but when you sell these shares you will pay $ in front-end fees. LORENZO: It sounds like these fees could start to add up. What's the most I can expect to in fees? % in back-end load NEHA: If a fund charges a 4% front-end load and a 2.5% 12-b1 fee, then it can charge a maximum of only charges without violating the cap. LORENZO: Thanks! This was really helpful. So it sounds like you'd recommend looking for funds whenever possible