Question

The performance and fees of 4 share classes of the same fund are in following table:

                                      Class Inst                Class Inv               Class A                  Class B

Expense ratio                     1%                          1%                        1%                       1%

12b-1 fee                                                            0.3%                     0.1%

Front-end load                                                                                 4%

Back-end load                                                                                                           start at 6%

                                                                                                                                    and ↓ 1%/year

All share classes have the same annual rate of return of 10.0%. If you have $10,000 to invest

in each of these share classes, how much will you get if you plan to sell them after 2 and 8

years?

Answer 1

	Class Inst	Class Inv	Class A	Class B
Expense ratio	1%	1%	1%	1%
12b-1 fee		0.30%	0.10%
Rate of return	10%	10%	10%	10%
Rate of return net of expense	9.00%	8.70%	8.90%	9.00%
Front end load	0%	0%	4%	0%
Amount invested	$         10,000.00	$            10,000.00	$          10,000.00	$         10,000.00
Actual amount invested	=10000*(1-0%)	=10000*(1-0%)	=10000*(1-4%)	=10000*(1-0%)
Actual amount invested	$         10,000.00	$            10,000.00	$            9,600.00	$         10,000.00
Amount after 2 year on invested amount	=10000*(1+9%)^2	=10000*(1+8.7%)^2	=9600*(1+8.9%)^2	=10000*(1+9%)^2
Amount after 2 year on invested amount	$         11,881.00	$            11,815.69	$          11,384.84	$         11,881.00
Back end charge	0%	0%	0%	5%
Amount net of back end charge	=11881*(1-0%)	=11815.69*(1-0%)	=11384.84*(1-0%)	=11881*(1-5%)
Amount net of back end charge	$         11,881.00	$            11,815.69	$          11,384.84	$         11,286.95
Amount after 8 year on invested amount	=10000*(1+9%)^8	=10000*(1+8.7%)^8	=9600*(1+8.9%)^8	=10000*(1+9%)^8
Amount after 8 year on invested amount	$         19,925.63	$            19,491.10	$          18,988.66	$         19,925.63
Back end charge	0%	0%	0%	0%
Amount net of back end charge	=19925.63*(1-0%)	=19491.1*(1-0%)	=18988.66*(1-0%)	=19925.63*(1-0%)
Amount net of back end charge	$         19,925.63	$            19,491.10	$          18,988.66	$         19,925.63