On January 1, you invest $10,000 in an open-end mutual fund selling for $25 per share that has a 2% load, 1.5% management fee and 1% 12b-1 expense s. If the fund NAV appreciates to $28 by the time you sell it on December 31, what was your return on investment?

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Quizplus · Accepted Answer

The initial investment is $10,000, but due to the 2% load, only $9,800 is actually invested in the fund. The NAV appreciation from $25 to $28 represents a 12% increase. However, the total expenses (management fee of 1.5% and 12b-1 expenses of 1%) amount to 2.5%, reducing the gross return to 9.5%. The net investment was $9,800, and the return on this investment, considering the load and expenses, is approximately 9.76%.

On January 1, You Invest $10,000 in an Open-End Mutual