In dual pricing, the price of new units comprises which components?

• A. Creation price and the fund manager's initial charge
• B. Redemption price and distribution costs
• C. Creation price and redemption fee
• D. Management fee and performance fee

Answer: (A)

In dual pricing, there are two prices: one for buying new units and one for selling existing ones. The price you pay to subscribe to new units is the creation price, which is the fund’s net asset value plus an initial charge (a front-end load) charged by the fund manager. This upfront charge covers the costs of creating new units and compensates the manager.

The other elements listed—such as redemption costs, distribution costs, or ongoing management and performance fees—are not part of the creation price. They relate to selling units or ongoing charges, not the purchase price.