You have $12,500 to invest and have two options:

1. Invest $2,500 into 5 actively managed funds

2. Invest the entire $12,500 into a Vanguard S&P index.

Assuming the future annual return is the same as the 5 yr average return, the maximum redemption ration will be charge to your account, and the 12 b-1 fee is charged annually (N/A =0)

Calculate the end value of each alternative after one year (as if you are going to sell them) before tax.

What are the end values if your investment last 3 year (as if you are going to sell them) before tax?

Can you find the break-even year for the two alternatives (i.e. the length of investment that gives the same end value for these two alternatives)?

Actively managed funds

Fund 1

5 year average return= 22.80%

Front load = N/A

Deferred load = N/A

Max redemption fee = .75%

Total expense ratio = .73%

12 b-1 = N/A

Fund 2

5 year average return= 5.99%

Front load = N/A

Deferred load = N/A

Max redemption fee = N/A

Total expense ratio = 1.19%

12 b-1 = N/A

Fund 3

5 year average return= -10.51%

Front load = 5.75%

Deferred load = N/A

Max redemption fee = 2.00%

Total expense ratio = 2.02%

12 b-1 = .25%

Fund 4

5 year average return= 21.79%

Front load = 5.75%

Deferred load = N/A

Max redemption fee = .75%

Total expense ratio = 1.04%

12 b-1 = .25%

Fund 5

5 year average return= 18.86%

Front load = N/A

Deferred load = N/A

Max redemption fee = N/A

Total expense ratio = 1.83%

12 b-1 = .25%

Passive Index Fund alternative

Vanguard S&P Index Fund

5 year average return= 12.90%

Front load = N/A

Deferred load = N/A

Max redemption fee = N/A

Total expense ratio = .05%

12 b-1 = .01%