Which of the following statements regarding mutual fund fees is correct?

Trailer fees, or trailing commissions, are an ongoing fee paid by the mutual fund company to the mutual fund dealer (and in turn, to the dealing representative) for providing ongoing service and advice to the client. This fee is calculated as a percentage of the client's assets invested in the fund and is paid periodically for as long as the investor holds the fund. It is paid out of the fund's management fee and is not a direct charge to the investor's account.

A. Trailer fees are paid from the fund's management fee revenue, not by redeeming an investor's units.
B. Trailer fees are an ongoing commission paid for as long as the client holds the fund, not a one-time fee paid only at purchase.
D. Trading commissions are operational expenses of the fund, paid by the fund itself, and are separate from the management fee paid to the fund manager.

1. IFSE Institute, Canadian Investment Funds Course (CIFC), Chapter 6: "Mutual Fund Fees and Expenses," Section on Trailer Fees. The text explains that trailer fees are calculated on the value of assets under management and paid by the fund manager to the dealer.

2. Canadian Securities Administrators (CSA), National Instrument 81-101 Mutual Fund Prospectus Disclosure, Form 81-101F3, Part B, Item 8. This document outlines the disclosure requirements for fees, including trailing commissions, clarifying they are paid to the dealer for services.