How this calculation works
The front-end load reduces the cash that buys fund units. The simplified annual expense factor applies to the grown balance before the end-of-year contribution enters.
Ending balance = prior balance × (1 + gross return) × (1 − annual expense rate) + end-of-year contribution after load.A worked example
A 2% load reduces 10,000 to 9,800. A 10% gross return grows it to 10,780, and the 1% expense assumption leaves 10,672.20.
Good to know
Constant-return illustration with annual fee timing. Fund expense ratios usually accrue through net asset value. Enter a gross return so embedded expenses are not counted twice. Taxes and redemption charges are excluded.
Reference: SEC investor guide to mutual fund fees (opens in a new tab) ↗
How the inputs affect the result
The balance gap measures both fees and the growth that fee dollars would have earned. The gap is therefore different from the amount deducted in any one year.
Extend the horizon to see the effect of repeated expenses.
Where the calculation applies
Constant-return illustration with annual fee timing. Fund expense ratios usually accrue through net asset value. Enter a gross return so embedded expenses are not counted twice. Taxes and redemption charges are excluded.
For a related calculation, see the Compound interest calculator.
Read more: SEC investor guide to mutual fund fees (opens in a new tab) ↗
A few questions, answered
Why is the final contribution charged a load but no annual expense?
The contribution arrives at the end of the final year. It buys fund units after the annual fee step in this timing convention.
What does the “Ten years at the same assumptions” setting illustrate?
Extend the horizon to see the effect of repeated expenses.