4. Comparing mutual funds Understanding the Costs Involved in Mutual Fund Investments Dmitri is debating purchasing a mutual fund, but he has some questions for his financial advisor, Frances. The following table presents information on four different open-end mutual funds that Dmitri and Frances are discussing. Use the information in the table to answer the questions that follow. FUND NAV NET CHG YTD % RET MinT p 12.32 2.6 TmRE r 15.77 PFIN 39.81 TopLA 43.21 -0.04 0.06 0.20 0.29 5.5 8.0 9.1 DMITRI: 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? FRANCES: Generally, funds that charge 12b-1 fees, such as MinT p, h outperform funds that do not charge these fees. DMITRI: What about front-end load fees? For example, suppose TopLA has a front-end load fee of 6%, when do I pay this fee? FRANCES: If you purchase 100 shares of this fund at the NAV, you will pay a commission of $ you will pay $ in front-end fees. DMITRI: It sounds like these fees could start to add up. What's the most I can expect to pay in fees? FRANCES: If a fund charges a 4% front-end load and a 4% 12-b1 fee, then it can charge a maximum of only charges without violating the cap. DMITRI: Thanks! This was really helpful. So it sounds like you'd recommend looking for but when you sell these shares % in back-end load funds whenever possible.

Understanding the Costs Involved in Mutual Fund Investments Demii is debating purchasing a mutual fund, but he has some questions for his financial advisor, Frances: The following table presents information on four diflerent cpen-end mutual funds that Demitri and Frances are discussing. Use the information in the table to answer the guestions that follow. DMIRI: After some research, Ive narrowid it down to these four funds, but can you explain to me the relationship between 12b1 fees and fund performance? FRNNCI S: Generally, funds that charge 12b-1 tees, such as MinT D. outperform funds that do not charge these fees: DMIRI: What about front end load fees? for example, auppose Topta has a front end load fer of 6%, when do I pay this fee? FRANCES: If you purchase 100 shares of this fund at the NAV, you will poy a comrinsion of -but when you sell these stares you will pay in front-end fees: DMtrRI: It sounds like these fees could start to add up. What's the most I can expect to pay in fees? FRANCist If a fund charges a 4% front ind load and a 4412 -b1 tee, then it can charge a maximum of only W in bockend load duarges without violating the cop DMIIBd: Thankst this was tealy helplul. So it sounds the yourd recormmend looking for funds whenever possible