Understanding the Costs Involved in Mutual Fund Investments Tim is debating purchasing a mutual fund, but he has some questions for his financial advisor, Alyssa. The following table presents information on four different open-end mutual funds that Tim and Alyssa are discussing. Use the information in the table to answer the questions that follow. TIM: After some research, I've narrowed it down to these four funds, but can you explain to me the relationship between 12b1 fees and fund performance? AL YSSA: Generally, funds that charge 12b1 fees, such as Mint p, outperform funds that do not charge these fees. TIM: What about front-end load fees? For example, suppose TopLA has a front-end load fee of 6%, when do I pay this fee? ALYSSA: 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: IIM: It sounds like these fees could start to add up. What's the most t can expect to pay in fees? AL.YSSA: If a fund charges a 2% front-end load and a 3.5% 12-b1 fee, then it can charge a maximum of only \% in back.end load charpes without violatino the cap. TIM: Thanks! This was really helpful. So it sounds kke you'd recommend looking for funds whenever possible. TIM: After some research, Fve narrowed it down to these four funds, but can you explain to me the relationship between 12b1 fees and fund performance? ALYSSA: Generally, funds that charge 12b1 fees, such as MinT p4 outperform funds that do not charge these fees. T1M: What about front-end load fees? For example, suppose TopL fee of 6%, when do I pay this fee? but when you sell these shares you will pay in front-end fees. TIM: It sounds fike these fees could start to add up. What's the most I can expect to pay in fces? A1YSSA: If a fund charges a 2% front-end load and a 3.5% 12-b1 fee, then it can charge a maximum of only charges without violating the cap. \% in back-end load TIM: Thankst This was really helpful, So it sounds tke you d recommend looking for funds whenever possible. will pay in front-end fees. TIM: It sounds like these fees could start to add up. What's the most 1 can expect to ALYSSA: If a fund charges a 2% front-end load and a 3.5%12b1 fee, then it can c I of only \% in back-end lo charges without violating the cap. IIM: Thanks! This was really helpful. So it sounds like you'd recommend looking for funds whenever possible