Conference nyoss1::market_investing

    Fees you want to AVOID if at all possible...According to mutual fund 
    industry experts I have seen these fees described as legal thievery
    of unsuspecting no-load mutual fund investors.  Basically it is a way
    for the fund manager to get a higher management fee while marketing
    under the umbrella of low/no-load funds.  There are too many excellent
    funds without 12(b)1's and sales charges to consider starting an 
    investment off in the hole.  
    
    My thoughts anyway!

          My understanding is that a 12(b)-1 fee is a fee imposed by a 
    mutual fund for the sake of Marketing expenses(adds in magazines/T.V. 
    Etc) and they are not reported as part of the Management fee. Instead 
    they are take directly out of the fund. I believe 12(b)-1 is the 
    federal law or regulation that allows these fees. I sure someone else
    here can explain the mechanics on how the funds get this money without
    reporting it to you.

Vern

A 12(b).1 fee is named after the section of the law or regulation that made it
legal.  (Just like 401K plans).  The level of subscripting hints at how well
hidden the provision was.

Before 12(b).1, there were two kinds of mutual funds in the world: load funds,
where a hefty chunk of your initial premium paid a commission to the salesman
who convinced you to buy it; and no-load funds where there were no commissions
because there was no salesman - you bought the funds direct, usually by mail.

Both types of funds charge management fees which cover the costs of running the
fund and include a profit margin (which may be large or small) for the
operators of the fund.

In the most common case, 12(b).1 fees are a different way for a fund to collect
the commission paid to the salesman who sells you the fund.  If a salesman tries
to sell you a "no-load" fund, it almost certainly is a fund that has 12(b).1
fees, because few salesmen work for free.  While a "load" is collected up
front, 12(b).1 fees are assessed against the value of the fund every year.  So
while a load might take 8% of your money up front, a 12(b).1 might take 1% per
year.  Which will cost you more will depend on how long you own the fund.

I believe there are also cases where 12(b).1 funds are not sold through
salesmen but the 12(b).1 fees pay for advertizing and such.  There may be cases
where you may not be aware that the person assisting you in buying the fund is
actually being paid a commission (or a salary financed by a commission to their
employer).  In all cases, you should consider carefully the total expenses and
fees of a mutual fund (because even straightforward management fees can vary
unconscionably), and you should be aware that in many prospectuses, the total
fees may never be listed anywhere (12(b).1 fees may be mentioned only on a
different page from other fees).

Since typically the salesman is paid up front and the 12(b).1 money is
collected over time, the fund can lose big if too many people don't keep money
in the fund for a substantial period.  To cover this case, many 12(b).1 funds
also have a "declining back-end load" which might charge a 8% "withdrawal fee"
in the first year, 7% in the second, ... ,0% after 8 years.  In this case, you
can't win with the 12(b).1 over the load (you always pay 8%) and you can lose
(you pay more than 8% if you hold more than 8 years).  But the tradeoff is
rarely quite so straightforward.

The real issue is that anyone with the sophistication to read this notesfile
shouldn't be paying a salesman big bucks to sell them a mutual fund.  They
should be buying a "pure no-load" with no load or 12(b).1 and a relatively low
management fee.  I would not label commissions "legal thievery" as (.1) does; I
would characterize them as very high fees for a service that I don't really
need.  The conclusion is the same; avoid them.

re: several

Ignoring a fund just because it has a load or a 12b is WRONG!

You have to look at the fund's performance after all fees are taken into 
account.

    How often do fees (12(b)1, management, etc.) change?  I realize that
    they are listed in the prospectus, but what keeps the fund from raising
    the fees?  And if they do raise the fees, are they required to give any
    advance notice (or any notice) to the shareholders?  I would hate to
    have to call the fund 2-3 times a year to find out if their fees had
    changed...
    
    Tim