that you feel comfortable with, just because there's a com-mission makes little sense."
"I'm a little perplexed," Cathy admitted. "If the load in a load fund goes to your advisor or salesperson, how does the actual manager of such a fund make money?"
"In addition to a potential load there is always, I repeat always, a management fee. Nobody works for free nor, for that matter, should be asked to. In addition to the fund manager's fee, certain other charges are often apportioned to the fund's shareholders. These charges may include everything from accounting fees to the cost of mailing reports. These—"
"Whoa, whoa, whoa there," Tom interrupted Roy. "Isn't all that going to get a little heavy?"
"Actually, it's not as expensive as you'd think. The ex-pense ratio—all of the management fees and costs lumped together and expressed as a percentage of the total fund value—is often lower than one percent and seldom higher that two percent," Roy countered.
"Yeah, but if my fund shows an average annual return of thirteen percent, that two percent is going to knock it down to eleven—that hurts," Tom pushed on.
"The two percent expense ratio you refer to in your example, Tom, is already reflected in the fund's reported thirteen percent average annual return. So—"
"Well, then, what the heck do I care what the expense ratio is?" Again Tom cut Roy off. "If it's too high, that is, if the managers are charging more than they're worth, that will be reflected in the past-performance figures."
Makes sense, I thought.
"True," Roy somewhat reluctantly agreed, "but I have two caveats. One: Make sure the current expense ratio is in