How should a fund apply redemption fees and contingent deferred sales loads for purposes of the after-tax return calculation?
A. Instruction 2 to Item 21(b)(2) of Form N-1A and Instruction 2 to Item 21(b)(3) of Form N-1A provide that all distributions by a fund, less the taxes due on such distributions, are reinvested at the price stated in the prospectus (including any sales load imposed upon reinvestment of dividends) on the reinvestment dates during the period. Instruction 6 to Item 21(b)(2) of Form N-1A and Instruction 6 to Item 21(b)(3) of Form N-1A provide that in determining the value of an investment at the end of the 1-, 5- or 10-year measuring period, a fund should assume a complete redemption, with the deduction of (i) all nonrecurring charges deducted at the end of the period, and (ii) the maximum sales load at the times, in the amounts, and under the terms disclosed in the prospectus. Accordingly, a fund should apply redemption fees and contingent deferred sales loads for purposes of the after-tax return calculation in the manner provided in the fund’s prospectus. For example, if a fund’s prospec
