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Investor Alert - Mutual Fund Fees

Mutual Fund 12b-1 fees are very much in the news these days. Some regulators are calling for reconsideration of these fees. The Oregon Division of Finance and Corporate Securities recommends that investors review their mutual fund prospectuses for 12b-1 fees and closely monitor such fees, which can reduce asset growth.

12b-1 fees — all ongoing fees — must be described in the fee table of the mutual fund's prospectus. The 12b-1 fee, named after a Securities and Exchange Commission rule, is not a one-time fee. It is calculated as a percentage of a fund's total assets for a particular share class and deducted with other ongoing fees that pay for marketing and distribution costs, other shareholder services and the fund's investment adviser, transfer agent, custodian, and administrator. Fees vary from fund to fund and for different share classes of the same fund.

For additional information on 12-b1 fees and mutual fund classes, visit the Financial Industry Regulatory Authority (FINRA) Web site, www.nasdr.com/alert_mfclasses.htm, or the Securities and Exchange Commission (SEC) Web site, www.sec.gov/answers/mffees.htm. There are calculators on both sites to help you determine which share class in a fund family offers the least-expensive fee structure. FINRA's "Mutual Fund Expense Analyzer" is at www.finra.com/Investor/Tools/Calculators/FundCalc/expense_analyzers.asp and the SEC’s "Mutual Fund Cost Calculator" is at www.sec.gov/investor/tools/mfcc/get-started.htm.

For more information or to obtain a complaint form, please visit the DFCS Web site, dfcs.oregon.gov/complaint.htm or call (866) 814-9710.