Who to do Trading?

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       Mutual funds have professional portfolio managers to assist in the
management of the fund’s portfolio and to buy and sell securities for the fund if
the directors approve. The fee the investment company pays for this service is
usually determined by the net assets of the fund. The general management fee
is usually 1⁄2 of 1% of the average annual net assets. The lower the assets, the
lower the fee and the higher the assets, the higher the fee, but the cost to the
shareholder is only $5 per year on each $1,000 in the fund.
       Shares for an open-end investment company are not sold in the same way
as stock for other corporations. A major difference is that investors buy and
redeem mutual funds at net asset value. Fund shares may be bought at the
public offering price through brokers/dealers who have contracts with the
Principal Underwriters for the fund. The public offering price is the same as
ask price and is the net asset value per share plus the sales charge. The net asset
value (NAV) is decided as of the close of the NYSE on business days the
exchange is open. NAV per share is calculated by dividing the value of all the
fund’s assets (with liabilities subtracted) by the number of shares outstanding.
The last sale price of the day is used for portfolio securities. Another name for
NAV is bid price. The public offering price is calculated once per day (at the
close of trading) on each day the NYSE is open.
       The offering (ask) price of a fund’s shares is determined by dividing the
NAV by 100% minus the sales charge. If a fund has a sales charge of 6% and a
net asset value of $8, the ask price is determined as follows: $8.00 divided by
(100% – 6%) or $8/.94 = $8.51. The offering or ask price is $8.51. The public
offering price for a mutual fund with a NAV of $7.50 and a 5% sales is
computed as follows: NAV divided by (100% – Sales Charge %) or $7.50
divided by (100% – 5%) 95% = $7.89.
       Redemption price is the amount the investor will receive at the time of
redemption. Mutual funds must be redeemed within seven days of receipt of an
investor’s request for redemption. The redemption price of a mutual fund is the
net asset value (NAV) per share next determined after the certificates are
delivered along with the written request for redemption. Some mutual fund
companies charge a redemption fee which is simply subtracted from the NAV
at the time of redemption. Redemption fee is a percentage charge to the


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