The percentage of the
assets that were spent to run a
mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs and
12b-1 (distribution and advertising ) fees. The
expense ratio does not include brokerage costs for trading the
portfolio, although these are reported as a percentage of assets to the
S.E.C. by the funds in a Statement of Additional Information (SAI). The SAI is available to
shareholders on request. Neither the expense ratio or the SAI includes the
transaction costs of
spreads, normally incurred in unlisted
securities and foreign
stocks. These two costs can add significantly to the reported expenses of a fund. The
expense ratio is often termed an Operating Expense Ratio (O.E.R.).
