A client invested $10,000 into a mutual fund (Class A units) at the beginning of the year. The fund's Net Asset Value per Unit (NAVPS) at the time of purchase was $20.00. Over the year, the fund declared distributions totaling $0.50 per unit, which were reinvested back into the fund at an average NAVPS of $20.50. At year-end, the fund's NAVPS rose to $21.50. Assuming no further purchases or redemptions and ignoring any sales charges, what is the client's approximate total end-of-year value?

Question: A client invested $10,000 into a mutual fund (Class A units) at the beginning of the year. The fund's Net Asset Value per Unit (NAVPS) at the time of purchase was $20.00. Over the year, the fund declared distributions totaling $0.50 per unit, which were reinvested back into the fund at an average NAVPS of $20.50. At year-end, the fund's NAVPS rose to $21.50. Assuming no further purchases or redemptions and ignoring any sales charges, what is the client's approximate total end-of-year value?

Answer options:

• $10,750
• $11,000 ✅ $11,121
• $11,350

Correct answer: $11,121

Explanation: Initially, the client purchased $10,000 / $20.00 = 500 units. The distributions of $0.50 per unit amount to 500 units * $0.50/unit = $250. Reinvested at $20.50 NAVPS, this buys $250 / $20.50 = 12.1951 additional units. The total units at year-end are 500 + 12.1951 = 512.1951 units. The end-of-year value is 512.1951 units * $21.50/unit = $11,012.20 (approx. $11,012).