Consider a no-load mutual fund with $400 million in assets, 50 million in debt, and 15 million shares at the start of the year and with $500 million in assets, 40 million in debt, and 18 million shares at the end of the year. During the year investors have received income distributions of $.50 per share and capital gain distributions of $.30 per share. If the total expense ratio is .75%, what is the rate of return on the fund?

Question

Quizplus · Accepted Answer

Since this is a no-load fund, all charges are already embedded in gross return. Thus, gross return and net return are the same. NAV₀ = (400 - 50)/15 = 23.33 NAV₁= [500 - 500(.0075) - 40]/18 = 25.35 Gross return = (25.35 - 23.33 + .80)/23.33 = 12.09%

Consider a No-Load Mutual Fund with $400 Million in Assets