Sarah is considering investing in a Series A mutual fund for her non-registered investment account. If the fund has an MER of 2.25% and pays an annual trailing commission of 0.75% to the dealer, what is the maximum sales charge she might incur at the time of purchase if she opts for an initial sales charge (front-end load)?

Question: Sarah is considering investing in a Series A mutual fund for her non-registered investment account. If the fund has an MER of 2.25% and pays an annual trailing commission of 0.75% to the dealer, what is the maximum sales charge she might incur at the time of purchase if she opts for an initial sales charge (front-end load)?

Answer options:

• 0.75%
• 2.25%
• 5.00% ✅ 9.00%

Correct answer: 9.00%

Explanation: Series A mutual funds typically include embedded dealer compensation and can have a Front-End Load (FEL). While the trailing commission is part of the MER, it is separate from a sales charge. Under CIRO MFD rules, the maximum initial sales charge (front-end load) permitted for mutual funds is 9.00%.